nep-gro New Economics Papers
on Economic Growth
Issue of 2020‒08‒24
fourteen papers chosen by
Marc Klemp
University of Copenhagen

  1. Persistence through Revolutions By Alberto Alesina; Marlon Seror; David Yang; Yang You; Weihong Zeng
  2. Connecting the Scientific and Industrial Revolutions: The Role of Practical Mathematics By Morgan Kelly; Cormac Ó Gráda
  3. Childlessness, celibacy and net fertility in pre-industrial England: the middle-class evolutionary advantage By de la Croix, David; Schneider, Eric B.; Weisdorf, Jacob
  4. Backwardness Advantage and Economic Growth in the Information Age: A Cross-Country Empirical Study By Khuong Vu; Simplice A. Asongu
  5. The Mechanics of the Industrial Revolution By Morgan Kelly; Joel Mokyr; Cormac Ó Gráda
  6. Ethnic Diversity, Concentration of Political Power and the Curse of Natural Resources By Wadho, Waqar; Hussain, Sadia
  7. Weber Revisited: The Protestant Ethic and the Spirit of Nationalism By Felix Kersting; Iris Wohnsiedler; Nikolaus Wolf
  8. The geography of innovation and development: global spread and local hotspots By Crescenzi, Riccardo; Iammarino, Simona; Ioramashvili, Carolin; Rodríguez-Pose, Andrés; Storper, Michael
  9. Inequality, living standards and growth: two centuries of economic development in Mexico By Bleynat, Ingrid; Challú, Amílcar; Segal, Paul
  10. Gender Gaps in Education By Bertocchi, Graziella; Bozzano, Monica
  11. Religion in Economic History: A Survey By Sascha O. Becker; Jared Rubin; Ludger Woessmann
  12. The education gender gap and the demographic transition in developing countries By Nguyen Thang Dao; Julio Dávila; Angela Greulich
  13. Building Knowledge Economies in Africa: An Introduction By Simplice A. Asongu; John Kuada
  14. Twins support the absence of parity-dependent fertility control in pretransition population By Clark, Gregory; Cummins, Neil; Curtis, Matthew

  1. By: Alberto Alesina; Marlon Seror; David Yang; Yang You; Weihong Zeng
    Abstract: Can efforts to eradicate inequality in wealth and education eliminate intergenerational persistence of socioeconomic status? The Chinese Communist Revolution in the 1950s and Cultural Revolution from 1966 to 1976 aimed to do exactly that. Using newly digitized archival records and contemporary census and household survey data, we show that the revolutions were effective in homogenizing the population economically in the short run. However, the pattern of inequality that characterized the pre-revolution generation re-emerges today. Almost half a century after the revolutions, individuals whose grandparents belonged to the pre-revolution elite earn 16 percent more and have completed more than 11 percent additional years of schooling than those from non-elite households. In addition, individuals with pre-revolution elite grandparents hold different values: they are less averse to inequality, more individualistic, more pro-market, and more likely to see hard work as critical to success. Through intergenerational transmission of values, socioeconomic conditions thus survived one of the most aggressive attempts to eliminate differences in the population and to foster mobility.
    Date: 2020–08–06
  2. By: Morgan Kelly; Cormac Ó Gráda
    Abstract: Disputes over whether the Scientific Revolution contributed to the Industrial Revolution begin with the common assumption that natural philosophers and artisans formed radically distinct groups. In reality, these groups merged together through a diverse group of applied mathematics teachers, textbook writers and instrument makers catering to a market of navigators, gunners and surveyors. From these “mathematical practitioners” emerged specialized instrument makers whose capabilities facilitated industrialization in two important ways. First, a large supply of instrument and watch makers provided Britain with a pool of versatile, mechanically skilled labour to build the increasingly complicated machinery of the late eighteenth century. Second, the less well known but equally revolutionary innovations in machine tools—which, contrary to the Habbakuk thesis, occurred largely in Britain during the 1820s and 1830s to mass produce interchangeable parts for iron textile machinery—drew on a technology of exact measurement developed for navigational and astronomical instruments.
    Keywords: Scientific Revolution; Industrial Revolution; Instruments; Mathematics; England; France; China; Islamic world
    Date: 2020–06
  3. By: de la Croix, David; Schneider, Eric B.; Weisdorf, Jacob
    Abstract: This paper reconsiders the fertility of historical social groups by accounting for singleness and childlessness. We find that the middle class had the highest reproductive success during England's early industrial development. In light of the greater propensity of the middle class to invest in human capital, the rise in the prevalence of these traits in the population could have been instrumental to England's economic success. Unlike earlier results about the survival of the richest, the paper shows that the reproductive success of the rich (and also the poor) were lower than that of the middle class, once accounting for singleness and childlessness. Hence, the prosperity of England over this period can be attributed to the increase in the prevalence of middle-class traits rather than those of the upper (or lower) class.
    Keywords: fertility; marriage; childlessness; European marriage patter; industrial revolution; evolutionary advantage; social class
    JEL: J12 J13 N33
    Date: 2019–09–01
  4. By: Khuong Vu (National University of Singapore, Singapore); Simplice A. Asongu (Yaoundé, Cameroon)
    Abstract: This paper seeks to gain insights into whether developing countries benefit more from the backwardness advantage for economic growth in the Information Age. The paper examines this concern through three complementary approaches. First, it derives theoretical grounds from the existing economic models to support the hypothesis that the internet, inter alia, enables developing countries to reap greater growth gains from technology acquisition and catch-up. Second, the paper uses descriptive evidence to show that the growth landscape has indeed shifted decisively in favor of developing countries in the Internet Age in comparison to the pre-internet period. Third, using rigorous econometric techniques with data of 163 countries over a 20-year period, 1996-2016, the paper evidences that developing countries on average reap significantly greater growth gains from internet adoption in comparison to the average advanced country. The paper discusses policy implications from the paper’s findings.
    Keywords: backwardness advantage; developing countries; internet; technology catch-up; GMM
    JEL: O40
    Date: 2020–01
  5. By: Morgan Kelly; Joel Mokyr; Cormac Ó Gráda
    Abstract: For contemporaries, Britain’s success in developing the technologies of the early Industrial Revolution rested in large part on its abundant supply of artisan skills, notably in metalworking. In this paper we outline a simple process where successful industrialization occurs in regions that start with low wages and high mechanical skills, and show that these two factors strongly explain the growth of the textile industry across the 41 counties of England between the 1760s and 1830s. By contrast, literacy and access to capital have no power in predicting industrialization, nor does proximity to coal. Although unimportant as a source of power for early textile machinery, Britain’s coal was vital as a source of cheap heat that allowed it over centuries to develop a unique range of sophisticated metalworking industries. From these activities came artisans, from watchmakers to iron founders, whose industrial skills were in demand not just in Britain but across all of Europe. Against the view that living standards were stagnant during the Industrial Revolution, we find that real wages rose sharply in the industrializing north and collapsed in the previously prosperous south.
    Keywords: Skilled labour; Power sources; Market integration; Standard of living; Industrial Revolution; Great Britain
    Date: 2020–06
  6. By: Wadho, Waqar; Hussain, Sadia
    Abstract: The empirical evidence suggests that the resource rich countries tend to have poor economic perfor- mance and higher rent seeking. In this paper, we develop a general equilibrium model explaining why natural resources turn out to be a curse in an economy divided into two classes: elite and workers. Our model explains the resource curse in a setup in which governing elite expropriate rents from natural resources which reduces the productive use of these resources. The expected costs and benefits of such rent seeking activities depend on the degree of ethnic polarization which a¤ects the concentration of political power, and on the quality of institutions which constraints rent seeking. The model predicts that in the presence of natural resources and rent seeking, ethnic diversity increases concentration of political power, reduces income per capita and increases income inequality. Moreover, the impact will be higher in economies that depend more on natural resources.
    Keywords: Rent seeking,Political power,Natural resource curse,Ethnic diversity
    JEL: Q32 D72 O11 O13
    Date: 2020
  7. By: Felix Kersting; Iris Wohnsiedler; Nikolaus Wolf
    Abstract: We revisit Max Weber’s hypothesis on the role of Protestantism for economic development. We show that nationalism is crucial to both, the interpretation of Weber’s Protestant Ethic and empirical tests thereof. For late nineteenth-century Prussia we reject Weber’s suggestion that Protestantism mattered due to an “ascetic compulsion to save”. Moreover, we find that income levels, savings, and literacy rates differed be-tween Germans and Poles, not between Protestants and Catholics, using pooled OLS and IV regressions. We suggest that this result is due to anti-Polish discrimination.
    Keywords: Max Weber, protestantism, nationalism
    JEL: N13 N33 O16 Z12
    Date: 2020
  8. By: Crescenzi, Riccardo; Iammarino, Simona; Ioramashvili, Carolin; Rodríguez-Pose, Andrés; Storper, Michael
    Abstract: Through successive industrial revolutions, the geography of innovation around the globe has changed radically, and with it the geography of wealth creation and prosperity. Since the Third Industrial Revolution, high incomes are increasingly metropolitan, leading to a renewal of inter-regional divergence within countries. These metropolitan areas are also hotbeds of innovation. At the same time, global networks for the production and delivery of goods and services have expanded greatly in recent decades. The globalization of production is mirrored in the globalization of innovation. The paper argues that the emerging geography of innovation can be characterised as a globalized hub-to-hub system, rather than a geography of overall spread of innovation and illustrates these trends using patent data. Although much attention has been given to explaining the rise and growth of innovation clusters, there is as yet no unified framework for the micro-foundations of the agglomeration and dispersion of innovation. In addition, there appear to be strong links between growing geographical inequality of innovation and prosperity, particularly within countries. This is particularly relevant in the context of declining overall research productivity, which could be driving growing geographical concentration. All in all, there is a rich agenda for continuing to investigate the relationship between the geography of innovation, economic development and income distribution.
    Keywords: geography of innovation; clusters; networks; inequality
    JEL: O33 R12
    Date: 2020–06
  9. By: Bleynat, Ingrid; Challú, Amílcar; Segal, Paul
    Abstract: Historical wage and incomes data are informative both as normative measures of living standards, and as indicators of patterns of economic development. We show that, given limited historical data, median incomes are most appropriate for measuring welfare and inequality, while urban unskilled wages can be used to test dualist models of development. We present a new dataset including both series in Mexico from 1800 to 2015 and find that both have historically failed to keep up with aggregate growth: per worker GDP is now over eight times higher than in the nineteenth century, while unskilled urban real wages are only 2.2 times higher, and median incomes only 2.0 times. From the perspective of inequality and social welfare, our findings confirm that there is no automatic positive relationship between economic growth and rising living standards for the majority. From the perspective of development, we argue that these findings are consistent with a dual economy model based on Lewis’s assumption of a reserve army of labour, and explain why Kuznets's predicted decline in inequality has not occurred.
    Keywords: inequality; living standards; Kuznets curve; Mexico
    JEL: D31 N36 O15
    Date: 2020–06
  10. By: Bertocchi, Graziella; Bozzano, Monica
    Abstract: This chapter reviews the growing body of research in economics which concentrates on the education gender gap and its evolution, over time and across countries. The survey first focuses on gender differentials in the historical period that roughly goes from 1850 to the 1940s and documents the deep determinants of the early phase of female education expansion, including pre-industrial conditions, religion, and family and kinship patterns. Next, the survey describes the stylized facts of contemporaneous gender gaps in education, from the 1950s to the present day, accounting for several alternative measures of attainment and achievement and for geographic and temporal differentiations. The determinants of the gaps are then summarized, while keeping a strong emphasis on an historical perspective and disentangling factors related to the labor market, family formation, psychological elements, and societal cultural norms. A discussion follows of the implications of the education gender gap for multiple realms, from economic growth to family life, taking into account the potential for reverse causation. Special attention is devoted to the persistency of gender gaps in the STEM and economics fields.
    Keywords: education; gaps; Gender
    JEL: J1 N3 O1
    Date: 2019–10
  11. By: Sascha O. Becker; Jared Rubin; Ludger Woessmann
    Abstract: This paper surveys the recent social science literature on religion in economic history, covering both socioeconomic causes and consequences of religion. Following the rapidly growing literature, it focuses on the three main monotheisms—Judaism, Christianity, and Islam—and on the period up to WWII. Works on Judaism address Jewish occupational specialization, human capital, emancipation, and the causes and consequences of Jewish persecution. One set of papers on Christianity studies the role of the Catholic Church in European economic history since the medieval period. Taking advantage of newly digitized data and advanced econometric techniques, the voluminous literature on the Protestant Reformation studies its socioeconomic causes as well as its consequences for human capital, secularization, political change, technology diffusion, and social outcomes. Works on missionaries show that early access to Christian missions still has political, educational, and economic consequences in present-day Africa, Asia, and Latin America. Much of the economics of Islam focuses on the role that Islam and Islamic institutions played in political-economy outcomes and in the “long divergence” between the Middle East and Western Europe. Finally, cross-country analyses seek to understand the broader determinants of religious practice and its various effects across the world. We highlight three general insights that emerge from this literature. First, the monotheistic character of the Abrahamic religions facilitated a close historical interconnection of religion with political power and conflict. Second, human capital often played a leading role in the interconnection between religion and economic history. Third, many socioeconomic factors matter in the historical development of religions.
    Keywords: religion, economic history, Judaism, Christianity, Islam, economic development, education, persecution, political economy, finance, specialization, trade
    JEL: Z12 N00 J15 I25
    Date: 2020
  12. By: Nguyen Thang Dao; Julio Dávila; Angela Greulich
    Abstract: This paper explores, theoretically and empirically, the role of the declining gender gap in education in the demographic transition and the emergence of modern economic growth. Specifically, the paper develops a model in the tradition of the unified growth theory that captures and interconnects the key empirical features of the demographic transition, the decline in gender gap in education, and the transition to sustained growth across less-developed economies. The mechanism on which the model relies comprises several interplaying components. First, technological progress reduces housework time through the creation and diffusion of labor-saving home appliances, which frees women’s time for childrearing, resulting in an initial increase in fertility, as well as in labor-force participation. Second, due to the possibly higher female labor-force participation as housework time decreases, households invest relatively more in their daughters’ education, given its higher return following the initial imbalance. This improves gender equality in education and increases the opportunity cost of childrearing, which leads to a subsequent decrease in fertility. Third and finally, the decrease in the education gender gap through higher investment in daughters’ education increases average human capital, thus accelerating technological progress in turn. This reinforcing loop results in the transition to a new fertility regime and accelerated economic growth. We provide the empirical confirmation of the model’s predictions using data from developing countries in the late 20th and early 21st centuries.
    Date: 2019–12
  13. By: Simplice A. Asongu (Yaounde, Cameroon); John Kuada (Aalborg University, Denmark)
    Abstract: Knowledge has emerged as a fundamental driver of economic growth and development by inter alia improving the effectiveness and efficiency of economic projects and boosting the process of finding new avenues of addressing developmental policy syndromes. Recent evidence suggests that Africa is on the threshold of significant and sustainable economic growth if its human and material resources can be effectively mobilised to support the process (Kuada & Mensah, 2017; Asongu & Tchamyou, 2019). Consequently, the World Bank’s Knowledge Economy Framework aims to explore and support the extent to which current policies in African countries affect the knowledge development process (and thereby competitiveness) on the continent. A knowledge economy is an economy in which economic prosperity largely depends on the accessibility, quality and quantity of information available, instead of the means of production (Asongu, 2017a, 2017b). This themed issue of Contemporary Social Science-‘Building Knowledge Economies in Africa’ - consists of papers that focus on, but are not limited to, the four dimensions of the World Bank’s Knowledge Economy Index. These are: information and communication technology, education, economic incentives and institutional regime, and innovation (Tchamyou, 2017). The themed issue engages with high quality contributions which, taken together, address the drivers towards knowledge-based economies. This introduction provides a context for understanding the importance of building knowledge economies in Africa and summarises the main contributions to the themed issue. The paper ends by advising scholars and policy makers regarding the risks associated with a colonial view of knowledge- notably the importance of proposing knowledge-based policies while avoiding hegemonic paradigms and hierarchical constructs. In summary, the issue consists of a set of theoretically informed, empirically robust, policy-relevant and accessible articles for both specialists and non-specialists.
    Keywords: Knowledge economy; Development; Africa
    JEL: O10 O30 O38 O55 O57
    Date: 2020–01
  14. By: Clark, Gregory; Cummins, Neil; Curtis, Matthew
    Abstract: A conclusion of the European Fertility Project in 1986 was that pretransition populations mostly displayed natural fertility, where parity-dependent birth control was absent. This conclusion has recently been challenged for England by new empirical results and has also been widely rejected by theorists of long-run economic growth, where pre-industrial fertility control is integral to most models. In this study, we use the accident of twin births to show that for three Western European–derived pre-industrial populations—namely, England (1730–1879), France (1670–1788), and Québec (1621–1835)—we find no evidence for parity-dependent control of marital fertility. If a twin was born in any of these populations, family size increased by 1 compared with families with a singleton birth at the same parity and mother age, with no reduction of subsequent fertility. Numbers of children surviving to age 14 also increased. Twin births also show no differential effect on fertility when they occurred at high parities; this finding is in contrast to populations where fertility is known to have been controlled by at least some families, such as in England, 1900–1949, where a twin birth increased average births per family by significantly less than 1.
    Keywords: economic growth; economic history; family planning; fertility; natural fertility
    JEL: N33 N31
    Date: 2020–07–17

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