nep-gro New Economics Papers
on Economic Growth
Issue of 2022‒11‒14
seven papers chosen by
Marc Klemp
University of Copenhagen

  1. Slavery and the British Industrial Revolution By Stephan Heblich; Stephen J. Redding; Hans-Joachim Voth
  2. Factor prices and induced technical change in the industrial revolution By Otojanov, Ravshonbek; Fouquet, Roger; Granville, Brigitte
  3. In Defence of the Endogenous Growth Theory: "Conditional" and "Unconditional" Convergence in Two-Country AK Models By Parello, Carmelo Pierpaolo
  4. Links between Growth, Inequality, and Poverty : A Survey By Cerra,Valerie; Lama,Ruy; Loayza,Norman V.
  5. The Political U: New Evidence on Democracy and Income By Campos, Nauro F.; Coricelli, Fabrizio; Frigerio, Marco
  6. The Slow Demographic Transition in Regions Vulnerable to Climate Change By Dao, Thang; Kalkuhl, Matthias; Vasilakis, Chrysovalantis
  7. Deindustrialization and Industry Polarization By Michael Sposi; Kei-Mu Yi; Jing Zhang

  1. By: Stephan Heblich (University of Toronto); Stephen J. Redding (Princeton University); Hans-Joachim Voth (University of Zurich)
    Abstract: Did overseas slave-holding by Britons accelerate the Industrial Revolution? We provide theory and evidence on the contribution of slave wealth to Britain’s growth prior to 1835. We compare areas of Britain with high and low exposure to the colonial plantation economy, using granular data on wealth from compensation records. Before the major expansion of slave holding from the 1640s onwards, both types of area exhibited similar levels of economic activity. However, by the 1830s, slavery wealth is strongly correlated with economic development – slave-holding areas are less agricultural, closer to cotton mills, and have higher property wealth. We rationalize these findings using a dynamic spatial model, where slavery investment raises the return to capital accumulation, expanding production in capital-intensive sectors. To establish causality, we use arguably exogenous variation in slave mortality on the passage from Africa to the Indies, driven by weather shocks. We show that weather shocks influenced the continued involvement of ancestors in the slave trade; weather-induced slave mortality of slave-trading ancestors in each area is strongly predictive of slaveholding in 1833. Quantifying our model using the observed data, we find that Britain would have been substantially poorer and more agricultural in the absence of overseas slave wealth. Overall, our findings are consistent with the view that slavery wealth accelerated Britain’s industrial revolution.
    Keywords: Slavery, Industrial Revolution, Great Britain
    JEL: F60 J15 N63
    Date: 2022–09
  2. By: Otojanov, Ravshonbek; Fouquet, Roger; Granville, Brigitte
    Abstract: Using historical data for the 1700–1914 period, this paper analyses the nature and direction of technical change in Britain. The evidence in this paper indicates that, over this long period, labour-saving technology adoption was a major response to changes in relative factor prices, thus supporting the hypothesis that ‘induced innovation’ was a major driver of technical change during the British industrial revolution. Labour saving was made possible and sustained by capital-augmenting and energy-augmenting technical change coupled with continuous capital accumulation and abundant energy supplies. This process placed the British economy on a higher capital–labour ratio equilibrium, and was the primary force driving sustained productivity growth, which further raised wages and living standards.
    Keywords: factor-saving technical change; induced innovation; industrial revolution; Grantham Research Institute on Climate Change and the Environment at the London School of Economics; and the ESRC Centre for Climate Change Economics and Policy (CCCEP); ES/R009708/1
    JEL: N73
    Date: 2022–09–26
  3. By: Parello, Carmelo Pierpaolo
    Abstract: Recent studies on cross-country (per capita) income inequality have found evidence for 'unconditional' convergence, and have interpreted this finding as a data rejection for AK growth models. This paper shows that a two-country version of the AK model with learning-by-doing externalities, extended to include international knowledge transfer, is: (i) consistent with the finding of 'unconditional' convergence that characterizes the world economy since mid 1980s; (ii) more effective than Neoclassical growth models to predict all types of convergence/divergence patterns that the empirical growth economists have documented in almost forty years of literature.
    Keywords: 'Unconditional' Convergence, Two-Country AK Model, Cross-Country Knowledge Transmission, Development Policies
    JEL: O12 O33 O41
    Date: 2022–10–19
  4. By: Cerra,Valerie; Lama,Ruy; Loayza,Norman V.
    Abstract: Is there a trade-off between raising growth and reducing inequality and poverty? This paper reviews the theoretical and empirical literature on the complex links between growth, inequality, and poverty, with causation going in both directions. The evidence suggests that growth can be effective in reducing poverty, but its impact on inequality is ambiguous and depends on the underlying sources of growth. The impact of poverty and inequality on growth is likewise ambiguous, as several channels mediate the relationship. But most plausible mechanisms suggest that poverty and inequality reduce growth, at least in the long run. Policies play a role in shaping these relationships and those designed to improve equality of opportunity can simultaneously improve inclusiveness and growth.
    Keywords: Inequality,Poverty Reduction Strategies,Economic Growth,Industrial Economics,Economic Theory&Research,International Trade and Trade Rules
    Date: 2021–03–26
  5. By: Campos, Nauro F. (University College London); Coricelli, Fabrizio (Paris School of Economics); Frigerio, Marco (University of Siena)
    Abstract: This paper throws new light on the relationship between income and democracy. Using data for 162 countries over 1960-2018, we show that the causal relationship between political and economic development is U- shaped: "intermediate" political regimes significantly lead to inferior economic performance vis-à-vis both "democracies" and "autocracies." Our results suggest "intermediate" regimes decrease long run GDP per capita by about 20 percent. These effects are mainly driven by political instability, while other potential mechanisms, such as education, investment and inequality, lack comparable empirical support. These findings are robust to, among others, using night-lights instead of GDP, different democracy measures and estimators.
    Keywords: democracy, income, growth, political development, economic development, non-linearity
    JEL: C33 D72 F15 O43 P16
    Date: 2022–09
  6. By: Dao, Thang (University of Roehampton); Kalkuhl, Matthias (Mercator Research Institute on Global Commons and Climate Change (MCC)); Vasilakis, Chrysovalantis ((CEE) Centre D'Ètudes de L'Emploi)
    Abstract: We consider how the demographic transition has been shaped in regions that are the least developed and the most vulnerable to climate change. Environmental conditions affect intra-household labor allocation because of the impacts on local resources under the poor infrastructural system. Climate change causes damage to local resources, offsetting the role of technological progress in saving time that women spend on their housework. Hence, the gender inequality in education/income is upheld, delaying declines in fertility and creating population momentum. The bigger population, in turn, degrades local resources through expanded production. The interplay between local resources, gender inequality, and population, under the persistent effect of climate change, may thus generate a slow demographic transition and stagnation. We provide empirical confirmation for our theoretical predictions from 44 Sub-Saharan African countries.
    Keywords: climate change, local resources, fertility, gender inequality in education, slow demographic transition
    JEL: J11 J16 Q01 Q20 Q54 Q56
    Date: 2022–10
  7. By: Michael Sposi; Kei-Mu Yi; Jing Zhang
    Abstract: We add to recent evidence on deindustrialization and document a new pattern: increasing industry polarization over time. We assess whether these new features of structural change can be explained by a dynamic open economy model with two primary driving forces, sector-biased productivity growth and sectoral trade integration. We calibrate the model to the same countries used to document our patterns. We find that sector-biased productivity growth is important for deindustrialization by reducing the relative price of manufacturing to services, and sectoral trade integration is important for industry polarization through increased specialization. The interaction of these two driving forces is also essential.
    Keywords: Structural Change; International Trade; Sector Biased Productivity Growth
    JEL: F11 F43 O41 O11
    Date: 2021–12–19

This nep-gro issue is ©2022 by Marc Klemp. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.