nep-gro New Economics Papers
on Economic Growth
Issue of 2021‒05‒24
seventeen papers chosen by
Marc Klemp
University of Copenhagen

  1. Collateral Damage: The Legacy of the Secret War in Laos By Riaño, Juan Felipe; Valencia Caicedo, Felipe
  2. Expanding the Measurement of Culture with a Sample of Two Billion Humans By Awad, Edmond; Cebrián, Manuel; Cuevas Rumin, Angel; Cuevas Rumin, Ruben; Desmet, Klaus; Martín, Ignacio; Obradovich, Nick; Ortuño-Ortín, Ignacio; Ozak, Omer; Rahwan, Iyad
  3. The Ancient Origins of the Wealth of Nations By Ashraf, Quamrul H.; Galor, Oded; Klemp, Marc
  4. Populist Leaders and the Economy By Funke, Manuel; Schularick, Moritz; Trebesch, Christoph
  5. Demographic Change, Technological Advances, and Growth: A Cross-Country Analysis By Park, Cyn-Young; Shin, Kwanho; Kikkawa, Aiko
  6. The Race of Man and Machine: Implications of Technology When Abilities and Demand Constraints Matter By Gries, Thomas; Naudé, Wim
  7. Slavery and development in nineteenth century Brazil By Palma, Nuno Pedro G.; Papadia, Andrea; Pereira, Thales; Weller, Leonardo
  8. The Effect of Colonial and Pre-Colonial Institutions on Contemporary Education in Africa By Leone Walters; Carolyn Chisadza; Matthew Clance
  9. Tapping into Talent: Coupling Education and Innovation Policies for Economic Growth By Akcigit, Ufuk; Pearce, Jeremy; Prato, Marta
  10. The effect of inter vivos gifts taxation on wealth inequality and economic growth By Template-Type: ReDIF-Paper 1.0; Ryota Nakano
  11. Effects of Exhaustible Resources and Declining Population on Economic Growth with Hotelling's Rule By Sasaki, Hiroaki; Mino, Kazuo
  12. The Gravitational Constant? By Jacks, David S.; O'Rourke, Kevin Hjortshøj; Taylor, Alan M.
  13. The Impact of Technological Change on Labor and Wage: The Japanese Silk Weaving Industry during the Industrial Revolution By Tetsuji Okazaki
  14. Democracy, technocracy and economic growth: evidence from 20 century Spain By Alessandro Melcarne; Juan S. Mora-Sanguinetti; Rok Spruk
  15. Reassessing the Resource Curse using Causal Machine Learning By Hodler, Roland; Lechner, Michael; Raschky, Paul A.
  16. Accounting for Growth in Spain, 1850-2019 By Prados de la Escosura, Leandro; Rosés, Joan R.
  17. Key Sectors in Endogeneous Growth By Huang, Jingong; Zenou, Yves

  1. By: Riaño, Juan Felipe; Valencia Caicedo, Felipe
    Abstract: As part of its Cold War counterinsurgency operations in Southeast Asia, the U.S. government conducted a "Secret War" in Laos from 1964-1973. This war constituted one of the most intensive bombing campaigns in human history. As a result, Laos is now severely contaminated with UXO (Unexploded Ordnance) and remains one of the poorest countries in the world. In this paper we document the negative long-term impact of conflict on economic development, using highly disaggregated and newly available data on bombing campaigns, satellite imagery and development outcomes. We find a negative, significant and economically meaningful impact of bombings on nighttime lights, expenditures and poverty rates. Almost 50 years after the conflict officially ended, bombed regions are poorer today and are growing at slower rates than unbombed areas. A one standard deviation increase in the total pounds of bombs dropped is associated with a 9.3% fall in GDP per capita. To deal with the potential endogeneity of bombing, we use as instruments the distance to the Vietnamese Ho Chi Minh Trail as well as US military airbases outside Laos. Using census data at the village and individual levels, we show the deleterious impact of UXOs in terms of health, as well as education, structural transformation and rural-urban migration.
    Keywords: Cold War; conflict; Development; growth; health; Human Capital; Laos; migration; structural transformation; UXO
    JEL: D74 N10 N15 O10 O53
    Date: 2020–10
  2. By: Awad, Edmond; Cebrián, Manuel; Cuevas Rumin, Angel; Cuevas Rumin, Ruben; Desmet, Klaus; Martín, Ignacio; Obradovich, Nick; Ortuño-Ortín, Ignacio; Ozak, Omer; Rahwan, Iyad
    Abstract: Culture has played a pivotal role in human evolution. Yet, the ability of social scientists to study culture is limited by the currently available measurement instruments. Scholars of culture must regularly choose between scalable but sparse survey-based methods or restricted but rich ethnographic methods. Here, we demonstrate that massive online social networks can advance the study of human culture by providing quantitative, scalable, and high-resolution measurement of behaviorally revealed cultural values and preferences. We employ publicly available data across nearly 60,000 topic dimensions drawn from two billion Facebook users across 225 countries and territories. We first validate that cultural distances calculated from this measurement instrument correspond to traditional survey-based and objective measures of cross-national cultural differences. We then demonstrate that this expanded measure enables rich insight into the cultural landscape globally at previously impossible resolution. We analyze the importance of national borders in shaping culture, explore unique cultural markers that identify subnational population groups, and compare subnational divisiveness to gender divisiveness across countries. The global collection of massive data on human behavior provides a high-dimensional complement to traditional cultural metrics. Further, the granularity of the measure presents enormous promise to advance scholars' understanding of additional fundamental questions in the social sciences. The measure enables detailed investigation into the geopolitical stability of countries, social cleavages within both small and large-scale human groups, the integration of migrant populations, and the disaffection of certain population groups from the political process, among myriad other potential future applications.
    Keywords: Cultural distance; Culture; gender differences; identity; Regional Culture; Subnational Differences
    JEL: C80 F1 J1 O10 R10 Z10
    Date: 2020–09
  3. By: Ashraf, Quamrul H.; Galor, Oded; Klemp, Marc
    Abstract: This essay explores the deepest roots of economic development. It underscores the significance of evolutionary processes in shaping fundamental individual and cultural traits, such as time preference, risk and loss aversion, and predisposition towards child quality, that have contributed to technological progress, human-capital formation, and economic development. Moreover, it highlights the persistent mark of the exodus of Homo sapiens from Africa tens of thousands of years ago on the degree of interpersonal population diversity across the globe and examines the impact of this variation in diversity for comparative economic, cultural, and institutional development across countries, regions, and ethnic groups.
    Keywords: Comparative development; entrepreneurial spirit; human evolution; interpersonal diversity; loss aversion; natural selection; preference for child quality; the; Time Preference
    JEL: N10 N30 O11 Z10
    Date: 2020–10
  4. By: Funke, Manuel; Schularick, Moritz; Trebesch, Christoph
    Abstract: Populism at the country level is at an all-time high, with more than 25% of nations currently governed by populists. How do economies perform under populist leaders? We build a new long-run cross-country database to study the macroeconomic history of populism. We identify 50 populist presidents and prime ministers from 1900 to 2018 and show that the economic cost of populism is high. After 15 years, GDP per capita is 10% lower compared to a plausible non-populist counterfactual. Rising economic nationalism and protectionism, unsustainable macroeconomic policies, and institutional decay under populist rule do lasting damage to the economy.
    Keywords: institutions; populism; protectionism
    JEL: E60 N10 P16
    Date: 2020–10
  5. By: Park, Cyn-Young (Asian Development Bank); Shin, Kwanho (Korea University); Kikkawa, Aiko (Asian Development Bank)
    Abstract: This paper revisits the impact of population aging on economic growth. In order to understand the impact of population aging on economic growth, it is important to consider the changes in the entire age distribution of demography. Our empirical analysis indicates that a change in age distribution that increases the proportion of older people while reducing the working-age population lowers economic growth. We also investigate the effect of technological advances on the relation between population aging and economic growth, using four plausible proxies of technological advancement: life expectancy, labor productivity, automation, and total factor productivity. We find that increasing life expectancy and labor productivity benefit old age groups as they likely help older age groups contribute more positively to future growth. More automation also helps improve productivity of old age groups but in a different way. When robot density increases, old age groups become less disadvantaged compared to the young. Lastly, technological adoption enhances the growth contribution of productive age groups from the 30s to 60s when one compares low with high total factor productivity scenarios.
    Keywords: demographic change; growth; labor productivity; life expectancy; robotics
    JEL: J11 J24 O33 O47 O57
    Date: 2020–07–10
  6. By: Gries, Thomas (University of Paderborn); Naudé, Wim (University College Cork)
    Abstract: In "The Race between Man and Machine: Implications of Technology for Growth, Factor Shares, and Employment," Acemoglu and Restrepo (2018b) combine the task-based model of the labor market with an endogenous growth model to model the economic consequences of artificial intelligence (AI). This paper provides an alternative endogenous growth model that addresses two shortcomings of their model. First, we replace the assumption of a representative household with the premise of two groups of households with different preferences. This allows our model to be demand constrained and able to model the consequences of higher income inequality due to AI. Second, we model AI as providing abilities, arguing that "abilities" better characterises the nature of the services that AI provide, rather than tasks or skills. The dynamics of the model regarding the impact of AI on jobs, inequality, wages, labor productivity and long-run GDP growth are explored.
    Keywords: technology, artificial intelligence, productivity, labor demand, income distribution, growth theory
    JEL: O47 O33 J24 E21 E25
    Date: 2021–04
  7. By: Palma, Nuno Pedro G.; Papadia, Andrea; Pereira, Thales; Weller, Leonardo
    Abstract: This paper brings new evidence on the legacy of slavery to economic development through the case study of Brazil during the nineteenth century. The conclusions contribute to the debate brought by the New History of Capitalism (NHC) about the role of slavery and industrialization in the United States. We argue that the NHC lacks a comparative perspective. Brazil imported more slaves than any other country in the world and slavery lasted longer and was more widespread than in the U.S. south. Rather than promoting economic growth and development, the evidence shows that slavery held back industrialization in Brazil. We also discuss the role of slavery on agricultural productivity and show that, as in the U.S. the use of violence does not explain increases in the productivity of cotton plantations.
    Keywords: Comparative History; New History of Capitalism; Slavery
    JEL: J47 N56 N66 O54
    Date: 2020–11
  8. By: Leone Walters; Carolyn Chisadza; Matthew Clance
    Abstract: This paper argues that contrary to previous ï¬ ndings, present-day education outcomes in Africa cannot be independently attributed to colonial or pre-colonial ethnic institutions. We propose that it is instead the complementarity or contention between colonial and precolonial institutions that result in education outcomes we observe today. Using geolocated DHS literacy outcomes for Cameroon, Cˆote d’Ivoire, Ghana, and Nigeria, our ï¬ ndings suggest that the positive effect of British rule on contemporary literacy is diminished in centralised ethnic regions. This paper contributes to debates on colonial and pre-colonial ethnic influences on African development, moving beyond country-level analysis.
    Keywords: Ethnic Institutions, Education, Africa
    JEL: I25 N17 Z13
    Date: 2021–01
  9. By: Akcigit, Ufuk; Pearce, Jeremy; Prato, Marta
    Abstract: How do innovation and education policy affect individual career choice and aggregate productivity? This paper analyzes the various layers that connect R&D subsidies and higher education policy to productivity growth. We put the development of scarce talent and career choice at the center of a new endogenous growth framework with individual-level heterogeneity in talent, frictions, and preferences. We link the model to micro-level data from Denmark and uncover a host of facts about the links between talent, higher education, and innovation. We use these facts to calibrate the model and study counterfactual policy exercises. We find that R&D subsidies, while less effective than standard models, can be strengthened when combined with higher education policy that alleviates financial frictions for talented youth. Education and innovation policies not only alleviate different frictions, but also impact innovation at different time horizons. Education policy is also more effective in societies with high income inequality.
    Keywords: Education Policy; Endogenous Growth; inequality; Innovation; IQ; R&D policy
    JEL: J24 O31 O38 O47
    Date: 2020–09
  10. By: Template-Type: ReDIF-Paper 1.0; Ryota Nakano (Graduate School of Economics, Osaka University)
    Abstract: In this study, we develop a three-period overlapping generations model with inter vivos gifts and human capital accumulation. We examine the effect of inter vivos gift taxation on wealth inequality and economic growth. The analysis shows that an increase in the tax rate reduces inequality, and a positive tax rate maximizes the growth rate.
    Keywords: economic growth, human capital accumulation, intergenerational transfer, wealth inequality, gift taxation
    JEL: O11 O40 I24
    Date: 2021–05
  11. By: Sasaki, Hiroaki; Mino, Kazuo
    Abstract: This study introduces declining population and exhaustible resources into a semi-endogenous growth model that explicitly incorporates firms' optimization behavior and investigates the relationship between the population growth rate and the growth rate of the per capita output. The main results are as follows. First, irrespective of whether the population growth rate is positive or negative, the long-run growth rate of per capita output can be positive, depending on the conditions. Second, when the population growth rate is positive, the long-run growth rate of per capita output depends positively on the saving rate, although the model belongs to the class of semi-endogenous growth without scale effects.
    Keywords: exhaustible resources; declining population; endogenous growth: Hotelling's rule
    JEL: O13 O44 Q32 Q43
    Date: 2021–05–17
  12. By: Jacks, David S.; O'Rourke, Kevin Hjortshøj; Taylor, Alan M.
    Abstract: We introduce a new dataset on British exports at the bilateral, commodity-level from 1700 to 1899. We then pit two primary determinants of bilateral trade against one another: the trade-diminishing effects of distance versus the trade-enhancing effects of the British Empire. We find that gravity exerted its pull as early as 1700, but the distance effect then attenuated and had almost vanished by 1800. Meanwhile the empire effect peaked sometime in the late 18th century before significantly declining in value. It was only after 1950 that distance would once again exert the same influence that it has today.
    Keywords: distance; Empire; Gravity
    JEL: F1 N7
    Date: 2020–09
  13. By: Tetsuji Okazaki
    Abstract: The impact of the Industrial Revolution on labor has long attracted the interest of economists as well as economic historians, and recent technological changes and changes in the labor market have newly raised interest in this issue. The accepted view is that technological change in the Industrial Revolution was deskilling and lowered the wage of workers. This paper reexamines this view, by investigating the silk weaving industry in early twentieth-century Japan, which experienced the Industrial Revolution. Power looms, a major technological innovation in the Industrial Revolution, substituted for routine tasks of handloom weavers, and thereby made weavers concentrate on nonroutine tasks, such as stopping looms and supplying warp or weft when it ran out and connecting threads when they broke. Using the model of Autor et al. (2003) and newly constructed plant-level panel data, this paper studies the implications of this change in labor for wages. We find that adoption of power looms was associated with significant increases in the wage of both female and male adult workers, playing a central role in weaving, which suggests the need for revision of the view that technological change in the Industrial Revolution was deskilling.
  14. By: Alessandro Melcarne (Université Paris Nanterre); Juan S. Mora-Sanguinetti (Banco de España); Rok Spruk (University of Ljubljana)
    Abstract: We examine the contribution of economic and institutional transitions as two potential sources of subnational economic growth in Spain. To this end, we exploit the economic reforms of the 1959 Stabilization Plan (as an example of technocratic, economy-oriented reform) and the democratic transition in 1979 in Spain as the sources of variation for a sample of 50 Spanish provinces in the period 1950-2016. Our approach is to examine the impacts by estimating the missing counterfactual scenarios using the synthetic control method. Our results unveil a positive effect for both economic and institutional transitions on subnational economic growth. A direct comparison of both transitions suggests that the effect of economic liberalization is four-fold higher than the effect of political liberalization. The average growth effect of the economic liberalization is around 40% higher relative to the counterfactual scenario and it appears to be permanent. The estimated effects are robust to the variety of placebo tests and additional robustness checks. This article also deepens the analysis of the effects of the 1959 plan and finds that the policies that generated the most positive impact were those of an “internal” nature, compared to the external ones, dependent on access to the IMF (also positive, but of lesser impact).
    Keywords: economic growth, political economy, Spain
    JEL: C23 D73 N24 O43
    Date: 2021–05
  15. By: Hodler, Roland; Lechner, Michael; Raschky, Paul A.
    Abstract: We reassess the effects of natural resources on economic development and conflict, applying a causal forest estimator and data from 3,800 Sub-Saharan African districts. We find that, on average, mining activities and higher world market prices of locally mined minerals both increase economic development and conflict. Consistent with the previous literature, mining activities have more positive effects on economic development and weaker effects on conflict in places with low ethnic diversity and high institutional quality. In contrast, the effects of changes in mineral prices vary little in ethnic diversity and institutional quality, but are non-linear and largest at relatively high prices.
    Keywords: Africa; Causal machine learning; conflict; economic development; mining; resource curse
    JEL: C21 O13 O55 Q34 R12
    Date: 2020–09
  16. By: Prados de la Escosura, Leandro; Rosés, Joan R.
    Abstract: The current productivity slowdown has stimulated research on the causes of growth. We investigate here the proximate determinants of long-term growth in Spain. Over the last 170 years output per hour worked raised nearly 24-fold dominating GDP growth, while hours worked per person shrank by one-fourth and population trebled. Half of labour productivity growth resulted from capital deepening, one-third from total factor productivity, and labour quality contributed the rest. In phases of acceleration (the 1920s and 1954-85), TFP was labour productivity's main driver complemented by capital deepening. Since Spain's accession to the European Union (1985), labour productivity has sharply decelerated as capital deepening slowed down and TFP stagnated. Up to the Global Financial Crisis (2008) GDP growth mainly resulted from an increase in hours worked per person and, to a less extent, from sluggish labour productivity coming mostly from weak capital deepening. Institutional constraints help explain the labour productivity slowdown.
    Keywords: Capital Deepening; growth; labour productivity; Labour quality; Spain; total factor productivity
    JEL: D24 E01 N13 N14 O47
    Date: 2020–10
  17. By: Huang, Jingong; Zenou, Yves
    Abstract: This paper develops a multi-sector endogenous growth model that includes an innovation network, which captures intrasectoral as well as heterogeneous intersectoral knowledge flows. We analyze the importance of sectors (nodes) and directed knowledge linkages (edges) in the innovation network by their contribution to the growth of knowledge in this economy. We show that the growth rate of knowledge is equal to the spectral radius of the innovation network. We also demonstrate that a sector's importance to growth (``key sectors'') is related to its positions in both the downstream and upstream technology network. Finally, the importance of a knowledge linkage is characterized by both the upstream centrality of its source sector, the downstream centrality of its target sector and the strength of knowledge flows from the source sector to the target sector.
    Keywords: Endogenous Growth; innovation networks; Key players
    JEL: D85 E2 O4
    Date: 2020–09

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