nep-gro New Economics Papers
on Economic Growth
Issue of 2018‒12‒17
fifteen papers chosen by
Marc Klemp
University of Copenhagen

  1. "The Out of Africa Hypothesis of Comparative Economic Development: Common Misconceptions" By Quamrul H. Ashraf; Oded Galor; Marc Klemp
  2. "Interpersonal Diversity and Socioeconomic Disparities Across Populations: A Reply to Rosenberg and Kang" By Quamrul H. Ashraf; Oded Galor; Marc Klemp
  3. Climatic Roots of Loss Aversion By Oded Galor; Viacheslav Savitskiy
  4. Agricultural Policy and Long-Run Development: Evidence from Mussolini’s Battle for Grain By Mario F. Carillo
  5. Historical Legacies and African Development By Stelios Michalopoulos; Elias Papaioannou
  6. Gravity and Migration before Railways: Evidence from Parisian Prostitutes and Revolutionaries By Morgan Kelly; Cormac Ó Gráda
  7. "War, what is it good for?": The industrial revolution! By Billington, Stephen D.
  8. The agriculture TFP growth and labor allocation in the Brazilian economy By Spolador, H.; Roe, T.
  9. A Simple Model of Growth Slowdown By Katsuyuki Shibayama
  10. IFAD RESEARCH SERIES 23 - The effect of the sectoral composition of economic growth on rural and urban poverty By Benfica, R.; Henderson, H.
  11. Notes on Guilds on the Eve of the French Revoloution By Cormac Ó Gráda
  12. Female autonomy generates superstars in long-term development: Evidence from 15th to 19th century Europe By Baten, Jörg; de Pleijt, Alexandra
  13. Functional distribution and wage inequality in recent Kaleckian growth models By Hein, Eckhard; Prante, Franz
  14. Overhead labour costs in a neo-Kaleckian growth model with autonomous expenditures By Won Jun Nah; Lavoie, Marc
  15. Does financial sector development affect the growth gains from trade openness? By N.R. Ramírez-Rondán; Marco E. Terrones; Andrea Vilchez

  1. By: Quamrul H. Ashraf; Oded Galor; Marc Klemp
    Abstract: "The importance of the prehistoric migration of anatomically modern humans from Africa for comparative economic development has been the focus of a vibrant research agenda in the past decade. This influential literature has attracted the attention of some scholars from other disciplines, and in light of existing methodological gaps across fields, has perhaps unsurprisingly generated some significant misconceptions. This article examines the critical views expressed by some scholars from other disciplines, and establishes that they are based on fundamental misunderstandings of the statistical methodology, the conceptual framework, and the scope of the analysis that characterize this influential literature..
    Date: 2018
  2. By: Quamrul H. Ashraf; Oded Galor; Marc Klemp
    Abstract: "The exploration of the impact of the prehistoric migration of anatomically modern humans from Africa on comparative economic development has been the focus of a vibrant research agenda in the past decade. This influential literature has attracted the attention of scholars from other disciplines, and in light of existing methodological gaps across fields, it has perhaps unsurprisingly generated some significant misconceptions. In particular, Rosenberg and Kang (2015) suggest that the hump-shaped effect of interpersonal population diversity on population density in the year 1500 is statistically insignificant in an extended sample of genetic diversity that was released more recently. Unfortunately, this assertion is based on elementary statistical errors. In fact, the hump-shaped effect of diversity on population density is even more pronounced in this extended sample of Pemberton et al. (2013), and it is present not only in the year 1500 but over the entire precolonial period for which population data are available (i.e., the 10,000BCE to 1500CE timeframe)."
    Date: 2018
  3. By: Oded Galor; Viacheslav Savitskiy
    Abstract: This research explores the origins of loss aversion and the variation in its prevalence across regions, nations and ethnic group. It advances the hypothesis and establishes empirically that the evolution of loss aversion in the course of human history can be traced to the adaptation of humans to the asymmetric effects of climatic shocks on reproductive success during the epoch in which subsistence consumption was a binding constraint. Exploiting regional variations in the vulnerability to climatic shocks and their exogenous changes in the course of the Columbian Exchange, the research establishes that consistent with the predictions of the theory, individuals and ethnic groups that are originated in regions marked by greater climatic volatility have higher predisposition towards loss-neutrality, while descendants of regions in which climatic conditions tended to be spatially correlated, and thus shocks were aggregate in nature, are characterized by greater intensity of loss aversion.
    JEL: D81 D91 Z10
    Date: 2018–11
  4. By: Mario F. Carillo (Università di Napoli Federico II and CSEF)
    Abstract: This paper explores the effect of agricultural policies on industrialization and economic development over the long run. I analyze the differential effect of the Battle for Grain, implemented by the Italian Fascist regime to achieve self-sufficiency in wheat production, on the development path across areas of Italy. Employing time variation, along with cross-sectional variation in the suitability of land for implementing the advanced wheat production technologies, I find that the policy had unintended positive effects on industrialization and economic prosperity which have persisted until the present day. Furthermore, I find that the positive effect of the Battle for Grain on human capital accumulation was instrumental in this process, suggesting that the complementarity between human capital and agricultural technology may be a critical mechanism through which agricultural productivity may enhance the development of non-agricultural sectors.
    Keywords: Economic Growth; Agricultural Policy; Human Capital
    Date: 2018–12–10
  5. By: Stelios Michalopoulos; Elias Papaioannou
    Abstract: As Africa's role on the global stage is rising, so does the need to understand the shadow of history on the continent's economy and polity. We discuss recent works that shed light on Africa's colonial and precolonial legacies. The emerging corpus is remarkably interdisciplinary. Archives, ethnographic materials, georeferenced censuses, surveys, and satellite imagery are some of the sources often combined to test influential conjectures put forward in African historiography. Exploiting within-country variation and employing credible, albeit mostly local, identification techniques, this recent literature has uncovered strong evidence of historical continuity as well as instances of rupture in the evolution of the African economy. The exposition proceeds in reverse chronological order. Starting from the colonial period, which has been linked to almost all of Africa's post-independence maladies, we first review works that uncover the lasting legacies of colonial investments in infrastructure and human capital and quantify the role of various extractive institutions, such as indirect rule and oppression associated with concessionary agreements. Second, we discuss the long-lasting impact of the "Scramble for Africa" which led to ethnic partitioning and the creation of artificial modern states. Third, we cover studies on the multi-faceted legacy of the slave trades. Fourth, we analyze the contemporary role of various precolonial, ethnic-specific, institutional and social traits, such as political centralization. We conclude by offering some thoughts on what we view as open questions.
    JEL: N00 N10 N77 N87 N97 O10 O43 O55
    Date: 2018–11
  6. By: Morgan Kelly; Cormac Ó Gráda
    Abstract: Although urban growth historically depended on large inflows of migrants, little is known of the process of migration in the era before railways. Here we use detailed data for Paris on women arrested for prostitution in the 1760s, or registered as prostitutes in the 1830s and 1850s; and of men holding identity cards in the 1790s, to examine patterns of female and male migration. We supplement these with data on all women and men buried in 1833. Migration was highest from areas of high living standards, measured by literacy rates. Distance was a strong deterrent to female migration (reflecting limited employment opportunities) that falls with railways, whereas its considerably lower impact on men barely changes through the nineteenth century.
    Keywords: Migration; Gravity; Prostitution
    JEL: N
    Date: 2018–06
  7. By: Billington, Stephen D.
    Abstract: Did the French Revolutionary and Napoleonic wars contribute to the Industrial Revolution? Recent scholarship argues warfare was an important factor in explaining Britain's industrialisation, by encouraging the invention and diffusion of key technologies with military applications. I re-examine this hypothesis by analysing the patenting of military inventions and inventions considered to be economically valuable during the Industrial Revolution. I find war led to a permanent increase in the rate of military and valuable patenting. War likely created a demand for superior military technologies, while increased wartime production led to demands for more valuable technologies, which both stimulated the Industrial Revolution.
    Keywords: Industrial Revolution,Patents,War
    JEL: N43 N74 O31
    Date: 2018
  8. By: Spolador, H.; Roe, T.
    Abstract: This paper analyzes the main forces related to the declining agricultural employment in the Brazilian economy, and its contribution to country s economic growth for the period 1970-2015. We employ a novel three sector growth accounting exercise, and a multisector growth model to estimate the various economic forces that serve to pull and push labor out of agriculture. Our results supports the conclusion that agriculture, whose rate of TFP growth tends to dominate that of the industrial and service sector, has had two roles on recent economic growth: the first is associated to TFP growth, and second is the labor transference to other sectors, and more specifically to the service sector. We also find evidence of sectoral TFP correlation suggesting technological spill over between sectors. Acknowledgement :
    Keywords: Labor and Human Capital
    Date: 2018–07
  9. By: Katsuyuki Shibayama
    Abstract: This paper studies a simple endogenous growth model to explain growth slowdowns. It is designed to explain, for example, the middle income trap often observed in the south-east Asian countries, the U.K.'s productivity puzzle after the Great Recession and the lost decades of Japan in a unified framework. It is based on the Romer's (1990, JPE) variety expansion model with additional state variable, which we call the R&D environment. The R&D environment is a sort of social capital that captures the research network and culture, society's attitude towards research activities, and so on. Together with the non-negativity constraint of the labour supply, this additional state variable generates multiple steady states (balanced growth paths, BGPs). The model has three BGPs, of which the middle one is unstable (explosive) while the other two satisfy the saddle path stability with high and low R&D activities. Without stochastic shocks, the model exhibits strong initial state dependency, meaning that even only small difference in the initial state could lead to a large difference in the long-run. With stochastic shocks, occasional shifts between two stable BGPs can occur. The model offers an intuitive explanation why a financial shock is particularly important for growth slowdowns. Interestingly, before a growth slowdown, a financial malfunctioning raises the stock return. Finally, our model is fairly realistic in the sense that it allows us to do calibration exercises which are rather standard in the business cycle studies.
    Keywords: endogenous growth; growth slowdown; dynamic stochastic general equilibrium model; middle-income trap; natural resource curse; productivity puzzle; R&D; official development assistance
    JEL: E3 O3 O4
    Date: 2018–11
  10. By: Benfica, R.; Henderson, H.
    Abstract: We examine the relationship between the sectoral composition of economic growth and the rural-urban composition of poverty. To this end, we use a new cross-country panel dataset consisting of 146 rural and urban poverty “spells” for 70 low- and middle-income countries. We find that rural (urban) poverty is highly responsive to agricultural (non-agricultural) productivity growth. The effect of agricultural productivity growth on rural poverty is particularly strong for countries with little dependence on natural resources. We also find that growth in the share of employment in the non-agricultural sector (i.e. structural transformation) reduces rural poverty, most notably for countries at a low initial level of development. These findings are robust to changes in key assumptions, including using alternative poverty lines. Finally, we use our estimates to examine the historical contribution of different sources of economic growth to rural and urban poverty reduction across regions.
    Keywords: Agricultural Finance
    Date: 2018
  11. By: Cormac Ó Gráda
    Abstract: This short paper reviews the economic-historical literature on ancien régime French guilds and suggests some paths for future research.
    Keywords: Guilds; Apprenticeship; Economic history; France
    JEL: N33
    Date: 2018–02
  12. By: Baten, Jörg; de Pleijt, Alexandra
    Abstract: Many countries did not accumulate sufficient human capital to be successful, because they did not make use of the potential of the female half of their population. Other countries did the opposite and became "superstars" and pioneers in long-term economic development. This view is supported by studying female autonomy and numeracy indicators of 27 countries and 268 regions in Europe between 1500 and 1900. We approach endogeneity issues by exploiting exogenous variation in gender-biased agricultural specialization.
    Keywords: Early modern growth; Female autonomy; human capital formation
    JEL: N13 N33 O40
    Date: 2018–12
  13. By: Hein, Eckhard; Prante, Franz
    Abstract: This contribution provides a review of recent considerations of wage inequality in Kaleckian models of distribution and growth. On the one hand, we address modelling approaches in which a distinction is made between managers and workers, where the salaries of the former are treated as overhead costs in a target-return pricing framework. Distribution between profits and wages, and between managers and direct labour, will thus depend on the level of economic activity, in particular in a short-run cyclical perspective. On the other hand, we review more recent Kaleckian models, which explicitly introduce wage inequality, but maintain the simple mark-up pricing approach, thus abstracting from explicit consideration of overhead costs. Explicitly or implicitly, these models rather adhere to a medium-run perspective. Finally, we provide a simple neo-Kaleckian distribution and growth model with wage inequality, which allows for different medium-run demand regimes in a stylized way.
    Keywords: functional income distribution,wage inequality,distribution,growth,Kaleckian models
    JEL: E12 E25 D31
    Date: 2018
  14. By: Won Jun Nah; Lavoie, Marc
    Abstract: One of the most notable features of income distribution is the widening wage differential among workers: there is a redistribution in favor of top management at the detriment of ordinary workers. The paper incorporates this distinction between overhead managerial labour and direct labour into a neo-Kaleckian growth model with target-return pricing, where an autonomously growing demand component ultimately determines the long-run path of an economy. Our aim is to explore the role of overhead labour costs in the coevolution of income distribution and economic growth. When overhead labour is taken into account, the share of profits becomes an increasing function of the rate of utilization of capacity. This implies that empirical research based on the post-Kaleckian specification of the investment function may fail to isolate the pure profitability effects and is likely to be biased in finding a profit-led regime. Our model features convergence to a fully-adjusted position in the long run. This is achieved by simultaneous path-dependent adjustments, both in the normal rate of utilization of capacity and in the growth rate of sales expected by firms. We examine the parametric conditions under which the model achieves a wage-led growth regime, in the restricted sense that both the average rates of accumulation and utilization decrease during the transitional dynamics arising from an upward adjustment of the normal rate of profit. Moreover, it is shown that a more equitable wage distribution between the "working rich" and the "working poor" will strengthen the wage-led nature of the economy.
    Keywords: neo-Kaleckian,growth,overhead labour,autonomous expenditures,targetreturn pricing
    JEL: E11 E37 O41
    Date: 2018
  15. By: N.R. Ramírez-Rondán (Universidad del Pacífico); Marco E. Terrones (Universidad del Pacífico); Andrea Vilchez (Universidad del Pacífico)
    Abstract: A sizeable literature suggests that financial sector development could be an important enabler of the growth benefits of trade openness. We provide a comprehensive analysis of how financial development can affect the relationship between trade openness and growth using a dynamic panel threshold model and an extensive dataset for a large sample of countries for the 1970-2015 period. We find that there is a financial development threshold in which trade openness has a positive and significant effect on economic growth. We also find that when splitting the sample into industrialized and non-industrialized countries, the financial development threshold that enables the growth benefits of trade is higher in the former group of countries than in the latter. This finding is consistent with the fact that the export composition of industrialized countries is tilted towards more capital-intensive finance-constrained goods.
    Keywords: Trade openness, growth, threshold model, panel data
    JEL: F43 O41 C33
    Date: 2018–11

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