nep-gro New Economics Papers
on Economic Growth
Issue of 2019‒07‒29
thirteen papers chosen by
Marc Klemp
University of Copenhagen

  1. Pre-Colonial Warfare and Long-Run Development in India By Dincecco, Mark; Fenske, James; Menon, Anil; Mukherjee, Shivaji
  2. Does population diversity matter for economic development in the very long-term? Historic migration, diversity and county wealth in the US By Rodríguez-Pose, Andrés; von Berlepsch, Viola
  3. The Institutional Dynamics of Colonial Exploitation By D'Alessandro, Simone; DISTEFANO, Tiziano
  4. Innovation and Economic Growth: Does Internet Matter? By Bakari, Sayef
  5. Economic Development in Spain, 1815-2017 By Leandro Prados de la Escosura; Blanca Sánchez-Alonso
  6. Long-Term Macroeconomic Effects of Climate Change: A Cross-Country Analysis By Matthew E. Kahn; Kamiar Mohaddes; Ryan N. C. Ng; M. Hashem Pesaran; Mehdi Raissi; Jui-Chung Yang
  7. An Analysis of the Importance of Both Destruction and Creation to Economic Growth By Gregory Huffman
  8. The Economic Rise and Fall of the Silesian Únĕtice Cultural Population : a Case of Ecologically Unsustainable Development ? By Clement Tisdell; Serge Svizzero
  9. The Sources of British Economic Growth since the Industrial Revolution: Not the Same Old Story By Crafts, Nicholas
  10. Samuelson's Contributions to Population Theory and Overlapping Generations in Economics By Lee, Ronald D.
  11. Inflation, Unemployment and Happiness: empirical evidences of the contribution of Economic Growth. By Jalal El ouardighi; Francis Munier
  12. Three Revolutions of the Modern Era By Easterlin, Richard A.
  13. Revisiting water and economic growth from a long-term perspective By Rosa Duarte; Vicente Pinilla; Ana Serrano

  1. By: Dincecco, Mark (University of Michigan); Fenske, James (University of Warwick); Menon, Anil (University of Michigan); Mukherjee, Shivaji (University of Toronto)
    Abstract: We analyze the relationship between pre-colonial warfare and long-run development patterns in India. We construct a new, geocoded database of historical conflicts on the Indian subcontinent, from which we compute measures of local exposure to pre-colonial warfare. We document a positive and significant relationship between pre-colonial conflict exposure and local economic development across India today. The main results are robust to numerous checks, including controls for geographic endowments, initial state capacity, colonial-era institutions, ethnic fractionalization, and colonial and post-colonial conflict, and an instrumental variables strategy that exploits variation in pre-colonial conflict exposure driven by the cost distance to the Khyber Pass. Using rich archival and secondary data, we show that early state-making and fiscal development, greater political stability, and basic public goods investments are channels through which pre-colonial warfare has influenced local economic development.
    Keywords: JEL Classification:
    Date: 2019
  2. By: Rodríguez-Pose, Andrés; von Berlepsch, Viola
    Abstract: Does population diversity matter for economic development in the long-run? Is there a different impact of diversity across time? This paper traces the short-, medium-, and long-term economic impact of population diversity resulting from the big migration waves of the late 19th and early 20th centuries to the United States (US). Using census data from 1880, 1900, and 1910, the settlement pattern of migrants across the counties of the 48 US continental states is tracked in order to construct measures of population fractionalization and polarization at county level. Factors which may have influenced both the individual settlement decision at the time of migration as well as county-level economic development in recent years are controlled for. The results of the analysis show that high levels of population fractionalization have a strong and positive influence on economic development in the short-, medium-, and long-run. High levels of polarization, by contrast, undermine development. Despite a stronger effect on income levels in the first 30 years, we find these relationships to be extremely long-lasting: counties with a more heterogeneous population composition over 130 years ago are significantly richer today, whereas counties that were strongly polarized at the time of the migration waves have endured persistent negative economic effects.
    Keywords: diversity; fractionalization; polarization; economic development; counties; USA; 269868
    JEL: O1
    Date: 2018–12–04
  3. By: D'Alessandro, Simone; DISTEFANO, Tiziano
    Abstract: This paper focuses on the interaction between the legacy of institutional arrangements and incentives on long-term development. We recalled two studies focusing on the long term effects of geographic discontinuities in colonial practice in India and Peru and we confronted the two historical cases as to emphasise the role of capital accumulation and equality of distribution. Furthermore, we propose an evolutionary game model to capture the evolutionary dynamics of institutional assets defining egalitarian or iniquitous income divisions in a non-cooperative setting. This framework sheds light on the role of the colonial governments in the interaction between local institutions and foreign colonial rule in terms of distribution, resources extraction, social asymmetries and finalised investments.
    Keywords: Colonialism, Evolutionary Game Theory, Solow growth theory, inequality
    JEL: F43 O1 P3
    Date: 2019–07–01
  4. By: Bakari, Sayef
    Abstract: We analyze the relationship between economic growth and innovation taking into consideration the importance of the internet. To do so, we use a panel ARDL model, with data on a sample of 76 developed and developing countries in different geographic regions for the 1995–2016 period. Our findings provide empirical evidence of the positive role of innovation and internet in economic growth and the positive role of economic growth and internet in innovation. From these results, we derive several basic policy conclusions.
    Keywords: Innovation, Economic Growth, Internet
    JEL: O31 O32 O38 O47 O50
    Date: 2019–06
  5. By: Leandro Prados de la Escosura (Universidad Carlos III, CEPR); Blanca Sánchez-Alonso (Universidad San Pablo-CEU)
    Abstract: In assessments of modern Spain’s economic progress and living standards inadequate natural resources, inefficient institutions, lack of education and entrepreneurship, and foreign dependency are frequently blamed for the poor performance up to mid-twentieth century, but no persuasive arguments are provided to explain why such adverse circumstances reversed, giving way to the fast transformation of the last half a century. It makes sense, hence, to inquire firstly how much economic progress has Spain achieved and what impact had on living standards and income distribution since the end of the Peninsular War to the present and, only then, to provide an interpretation. Recent research supports the view that income per person has improved remarkably, driven by increases in labour productivity, which derived, in turn, from a more intense and efficient use of physical and human capital per worker. Exposure to international competition represented a decisive element behind growth performance. In European perspective, Spain underperformed up to 1950. Thereafter, Spain’s economy caught up with advanced countries until 2007. Although the distribution of the fruits of growth did not follow a linear trend, but a Kuznetsian inverted U pattern, higher levels of income per capita are matched by lower inequality suggesting that Spaniards’ material well-being improved substantially during the modern era.
    Keywords: Spain, income per person, productivity, inequality, living standards
    JEL: N13 N14 O52 I30
    Date: 2019–07
  6. By: Matthew E. Kahn; Kamiar Mohaddes; Ryan N. C. Ng; M. Hashem Pesaran; Mehdi Raissi; Jui-Chung Yang
    Abstract: We study the long-term impact of climate change on economic activity across countries, using a stochastic growth model where labour productivity is affected by country-specific climate variables. defined as deviations of temperature and precipitation from their historical norms. Using a panel data set of 174 countries over the years 1960 to 2014, we find that per-capita real output growth is adversely affected by persistent changes in the temperature above or below its historical norm, but we do not obtain any statistically significant effects for changes in precipitation. Our counterfactual analysis suggests that a persistent increase in average global temperature by 0.04°C per year, in the absence of mitigation policies, reduces world real GDP per capita by 7.22 percent by 2100. On the other hand, abiding by the Paris Agreement, thereby limiting the temperature increase to 0.01°C per annum, reduces the loss substantially to 1.07 percent. These effects vary significantly across countries. We also provide supplementary evidence using data on a sample of 48 U.S. states between 1963 and 2016, and show that climate change has a long-lasting adverse impact on real output in various states and economic sectors, and on labour productivity and employment.
    Keywords: climate change, economic growth, adaption, counterfactual analysis
    JEL: C33 O40 O44 O51 Q51 Q54
    Date: 2019
  7. By: Gregory Huffman (Vanderbilt University)
    Abstract: A growth model is studied in which the destruction (or exit) and creative (or research) decisions are decoupled. This approach emphasizes that different agents make these interrelated decisions. The growth rate equals the product of a measure of the destruction and creation rates. The determinants of income mobility, income inequality, the lifespan of a firm, and the growth rate are studied. The equilibrium can either yield too high or low a level of innovation, but the destruction rate may also be too high or low. A non-linear tax/subsidy scheme, which alters the innovation and exit decisions, can improve welfare.
    Keywords: Economic Growth, Creative Destruction, Innovation, Tax Policy, Inequality
    JEL: E0 O3
    Date: 2019–07–22
  8. By: Clement Tisdell (University of Queensland [Brisbane]); Serge Svizzero (CEMOI - Centre d'Économie et de Management de l'Océan Indien - UR - Université de La Réunion)
    Abstract: After a long period of substantial economic growth and population increase in the Early Bronze Age, the reason(s) for the relatively rapid disappearance of Únĕtice cultural populations in Silesia and the subsequent lack of population in much of their former territory for around 200 years remains unclear. Various theories have been proposed for these developments, such as changed long distance trade routes or the depletion of materials for bronze-making. However, these fail to explain why large areas formerly occupied by the Únĕtice cultural population remained unoccupied (or virtually so) for so long after their abandonment. We argue, on the basis of demographic and other scientific evidence, that the collapse of this population was primarily the result of unsustainable ecological development. Human-induced changes to ecosystems eventually reduced agropastoral productivity, substantially reduced the standard of living of the populations involved and resulted in the abandonment of their settlements. The extent and nature of ecological damage was such that it took a considerable amount of time for natural ecosystems to recover sufficiently before the affected areas were economically suitable for resettlement. The possibility that resource shortages for bronze-making and changed trade routes contributed to the unsustainable economic development of Silesian Únĕtice cultural groups is also considered.
    Keywords: Agropastoral sustainability,Early Bronze Age,Ecosystem change,Natural resource depletion,Sustainable development,Únĕtice culture
    Date: 2018
  9. By: Crafts, Nicholas (University of Warwick)
    Abstract: This paper updates the classic growth accounting research of the early 1980s taking account of improved data that has subsequently become available. The picture of long-run growth which results from incorporating many revisions is considerably different. The long-run path of productivity growth is now that of a roller-coaster with twin peaks in the third quarters of the 19th and 20th centuries rather than a U-shape. Productivity growth appears to have been very slow to accelerate in the Industrial Revolution, the notion of an Edwardian climacteric is not persuasive and the current productivity slowdown stands out as unprecedented.
    Keywords: Climacteric; Golden Age; Growth Accounting; Industrial Revolution; Productivity Growth; Productivity Puzzle JEL Classification: N13; N14: O47: O52
    Date: 2019
  10. By: Lee, Ronald D. (University of California, Berkeley)
    Abstract: Paul Samuelson made a series of important contributions to population theory for humans and other species, evolutionary theory, and the theory of age structured life cycles in economic equilibrium and growth. The work is highly abstract but much of it was intended to illuminate issues of compelling policy importance, such as declining fertility and population aging. While his work in population economics has been very influential, his work in population and evolution appears to have been largely overlooked, perhaps because he seldom published in demographic journals or went to population meetings. Here I discuss his many contributions in all these areas, but give particular attention to demographic aspects of his famous work on overlapping generation models, social security systems, and population growth.
    Keywords: Samuelson, overlapping generations, social security, population growth rate, reproductive value, population cycles, intergenerational transfers, predator-prey, altruism
    JEL: J11 J18 Q57 H55 D64
    Date: 2019–06
  11. By: Jalal El ouardighi; Francis Munier
    Abstract: This paper improves the understanding of the trade-off between inflation and unemployment and its impact on Subjective Well-Being (SWB), considering the role of the (Growth Domestic Product) GDP Growth and the issue of heterogeneity/nonlinearity. Effects on SWB depends on the spread between observed and potential GDP growth. The results point out country heterogeneity and nonlinearity of the marginal effects of macroeconomic variables on SWB. Economic growth moderates the relationship between unemployment as well as inflation and SWB. Both unemployment and GDP per capita growth rates have an important impact on Europeans’ SWB. Fostering economic growth must be one of the priorities of European policy.
    Keywords: Subjective well-being, Economic growth, unemployment, inflation, heterogeneity / nonlinearity.
    JEL: C33 O10 I31
    Date: 2019
  12. By: Easterlin, Richard A. (University of Southern California)
    Abstract: The emergence and evolution of modern science since the 17th century has led to three major breakthroughs in the human condition. The first, the Industrial Revolution, started in the late 18th century and is based chiefly on developments associated with the rise of the natural sciences. The second, the Demographic Revolution, began in the latter half of the 19th century and is largely the result of progress in the life sciences. The third is a Happiness Revolution that commenced in the late 20th century and is the outgrowth of the social sciences. The first two revolutions, both familiar concepts, are summarized briefly; this paper develops the rationale for the third, the Happiness Revolution. It also notes the implications of this perspective for the interpretation of international cross-section studies.
    Keywords: Scientific Revolution, Industrial Revolution, Demographic Revolution, happiness, cross section
    JEL: N30 I31 C21
    Date: 2019–06
  13. By: Rosa Duarte; Vicente Pinilla; Ana Serrano
    Abstract: Water use has increased notably throughout the world over the last 250 years. The industrial revolution and the long-term economic growth processes, first experienced by Western countries, and then by many other regions, put growing pressure on water resources. If we focus on economic growth, structural change and the rise in per capita income have been key factors in explaining water use trajectories. In addition, population growth has also boosted water needs worldwide. On the contrary, the increase in water use efficiency, mostly driven by technological developments, but also by improved institutions and environmental awareness, has slowed down water requirements. In this general context, our study aims to analyse the drivers of water use from a long-term perspective. More specifically, we analyse world and regional trends in water use over the last century and their relationships with population, economic growth and technological change. We pay particular attention to the second half of the last century and the twenty-first century, given the rising demands linked to trade, the emergence of new economies with increasing per capita income and demands and the smooth technological change observed in developed countries.
    Keywords: water history, water use drivers, water long-term trends
    JEL: N50 Q15 Q25 Q56
    Date: 2019–07

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