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on Economic Growth |
| By: | Daron Acemoglu |
| Abstract: | This paper reviews the main motivations and arguments of my work on comparative development, colonialism and institutional change, which was often carried out jointly with James Robinson and Simon Johnson. I then provide a simple framework to organize these ideas and connect them with my research on innovation and technology. The framework is centered around a utility-technology possibilities frontier, which delineates the possible distributions of resources in a society both for given technology and working via different technological choices. It highlights how various types of institutions, market structures, norms and ideologies influence moves along the frontier and shifts of the frontier, and it provides a simple formalization of the social forces that lead to institutional persistence and those that can trigger institutional change. The framework also enables us to conceptualize how, during periods of disruption, existing—and sometimes quite small—differences can have amplified effects on prosperity and institutional trajectories. In this way, it suggests some parallels between different disruptive periods, including the onset of European colonialism, the spread (or lack thereof) of industrial technologies in the 19th century, and decisions related to the use, adoption and development of AI today. |
| JEL: | N30 O33 P50 |
| Date: | 2025–02 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33442 |
| By: | Bouscasse, Paul; Nakamura, Emi; Steinsson, Jón |
| Abstract: | Abstract: We estimate productivity growth in England from 1250 to 1870. Real wages over this period were heavily influenced by plague-induced swings in the population. Our estimates account for these Malthusian dynamics. We find that productivity growth was zero before 1600. Productivity growth began in 1600—almost a century before the Glorious Revolution. Thus, the onset of productivity growth preceded the bourgeois institutional reforms of seventeenth-century England. We estimate productivity growth of 2% per decade between 1600 and 1800, increasing to 5% per decade between 1810 and 1860. Much of the increase in output growth during the Industrial Revolution is explained by structural change—the falling importance of land in production—rather than faster productivity growth. Stagnant real wages in the eighteenth and early nineteenth centuries—Engels’ Pause—is explained by rapid population growth putting downward pressure on real wages. Yet feedback from population growth to real wages is sufficiently weak to permit sustained deviations from the “iron law of wages” prior to the Industrial Revolution. |
| Keywords: | Economics, Applied Economics, Econometrics, Generic health relevance, Decent Work and Economic Growth, Applied economics, Economic theory |
| Date: | 2025–01–01 |
| URL: | https://d.repec.org/n?u=RePEc:cdl:econwp:qt6821m6jp |
| By: | Kyle Fee |
| Abstract: | Using a common reduced-form regional growth model framework, an expanded geographic classification of counties, additional years of data, a trio of income inequality metrics, and multiple empirical specifications, this analysis confirms and builds upon the notion that the nature of the relationship between income inequality and economic growth varies across geography (Fallah and Partridge, 2007). A positive relationship between an income Gini coefficient and per capita income growth is observed only in central metro counties with population densities greater than 915 people per square mile or in about 5 percent of all counties, whereas previous research found a positive relationship in all metropolitan counties (27 percent of counties) and a negative relationship in nonmetropolitan counties. Where inequality is in the distribution is also shown to impact this relationship. Inequality in the top and bottom halves of the income distribution has a positive relationship with growth within this 5 percent of counties. However, in most locations (the other 95 percent of the counties), inequality in the bottom half of the income distribution has either no statistical relationship with growth or a positive relationship, while inequality in the top half of the income distribution tends to have a negative relationship. These patterns are relatively stable over time but tend to not be robust to the inclusion of county fixed effects. These results provide some evidence that the mechanisms explaining how this relationship varies across places are more likely associated with agglomeration and market incentives rather than social cohesion. This analysis also highlights the need for a robust research agenda focused on further refining the growth model along with incorporating new data sources and concepts of income inequality. |
| Keywords: | income inequality; regional growth; income Gini coefficient |
| JEL: | R11 O40 O18 D31 |
| Date: | 2025–02–18 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fedcwq:99562 |
| By: | MATTIA BALESTRA; GIULIO CAINELLI; ROBERTO GANAU; NADIIA MATSIUK; MARIO PASQUATO; ROBERTO PIERDICCA |
| Abstract: | We combine history with economic geography to contribute shading light on the long-run determinants of territorial development differentials in Italy. Specifically, we study the effects of historical sovereignty change on current local economic development. We measure historical sovereignty change through the yearly number of changes in sovereignty occurred in the period 1000–1861⎯that is, until the unification of Italy⎯and assess its effects on labor productivity in 2018. We estimate a negative effect of historical sovereignty change on current local economic development, and identify⎯both theoretically and empirically⎯civic capital as a plausible underlying mechanism. |
| Keywords: | Historical sovereignty change; civic capital; local economic development; Italy |
| Date: | 2025–02 |
| URL: | https://d.repec.org/n?u=RePEc:egu:wpaper:2504 |
| By: | Stefano Bosi (EPEE - Centre d'Etudes des Politiques Economiques - UEVE - Université d'Évry-Val-d'Essonne - Université Paris-Saclay); Carmen Camacho (PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École nationale des ponts et chaussées - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École nationale des ponts et chaussées - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Thai Ha-Huy (EPEE - Centre d'Etudes des Politiques Economiques - UEVE - Université d'Évry-Val-d'Essonne - Université Paris-Saclay) |
| Abstract: | In a simple discrete-time version of Lucas (1988) we find that the Balanced Growth Path (BGP) is always the unique optimal planner's solution: with linear or strictly concave production functions, with unbounded utility functions, with or without human capital depreciation. When the "speed" of human capital accumulation is high, the optimal working time is constant and below its upper bound. Capital grows at a constant factor, but degrowth is also possible when this factor is less one (under positive capital depreciation). When this speed is low, optimal working time is at its boundary and capital declines at its depreciation factor (degrowth). |
| Keywords: | Human capital, Balanced growth path |
| Date: | 2023–11 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:halshs-04805609 |
| By: | Albanese, Marina; Busato, Francesco; Ulloa Severino, Claudia; Varlese, Monica |
| Abstract: | The transition from fossil fuels to sustainable solutions remains a significant challenge, primarily due to path dependence which affects many economies. This calls for a new approach to economic growth that fully accounts for environmental costs. Consequently, understanding the factors that influence GDP growth is essential for achieving sustainable economic development. This study contributes to the existing literature by examining how greenhouse gas emissions, renewable energy, and urbanization impact GDP growth across various economic contexts. Employing a balanced panel comprising the US, EU27 and the BRICS economies from 1990 to 2022, it is among the first ones to incorporate the expanded BRICS+ economies into the analysis. Key empirical results are the following: First, Greenhouse gas emissions have a unidirectional effect on GDP growth across all panels, driven by emissions-intensive sectors like manufacturing; Second, in BRICS+ countries, urbanization and GDP are strongly interconnected, with emissions-driven growth posing future sustainability challenges; Third, the Environmental Kuznets Curve hypothesis is supported, indicating that while economic growth initially leads to greater pollution, higher incomes eventually promote investment in renewable sources. Hence, policies promoting the energy transition underscore the importance of integrating the economic growth and environmental sustainability in pursuing multidimensional well-being. |
| Keywords: | Renewable energy, Economic growth, GHG emission, Panel data regression. |
| JEL: | C23 E60 E66 F64 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:123550 |
| By: | Salomé Baslandze; Leo Liu; Elvira Sojli; Wing Wah Tham |
| Abstract: | This paper studies the interaction between process and product innovations and their distinct role in firm growth dynamics. We differentiate empirically and theoretically two types of process innovations: foundational processes that advance production technology and cost-reducing processes that enhance existing production efficiency. We develop an innovation model of product varieties with quality heterogeneity to illustrate how these innovations affect firm growth differently and highlight how process innovation induces product innovation. By analyzing millions of patent texts from 1900 to 2020, we classify innovations into product, cost-reducing process, and foundational process innovations. We find that foundational processes lead to sustained firm growth, especially through their effect on subsequent product creation. R&D-intensive firms focused on “deep-tech” innovations have an advantage in creating foundational processes, resulting in superior product quality. Using patents linked to FDA-approved drugs, we show that firms with a comparative advantage in creating foundational processes, due to greater knowledge and technological stock, tend to produce higher-value products. |
| Keywords: | foundational process innovation; process innovation; product innovation; process-driven products; firm growth; technological possibility frontier |
| JEL: | O3 O4 |
| Date: | 2025–02–19 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fedawp:99586 |
| By: | Maciej Bukowski (University of Warsaw, Faculty of Economic Sciences); Michał Kowalski (University of Warsaw, Faculty of Economic Sciences); Marcin Wroński (Warsaw School of Economics, Collegium of World Economy, Minda de Gunzburg Center for European Studies) |
| Abstract: | We provide the first estimate of the Polish national, regional and sectoral GDP in the interwar period. We find that the Polish economy's performance in the interwar period was much better than it was assumed before. In the years 1924 – 1938, the real GDP per capita increased by almost 40% or by 2.3% annually. As economic growth was stronger in the poorer regions significant regional convergence was achieved. Our results challenge the dominant narrative about the weak performance of the Polish economy in the interwar years. |
| Keywords: | economic history, Poland, Great Depression, regional convergence, economic growth |
| JEL: | N10 N14 N90 N94 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:war:wpaper:2025-03 |
| By: | Rossi, Federico; Michael Weber |
| Abstract: | This paper reviews how human capital is accumulated and used over the process of development. It highlights that differences in worker productivity are the byproducts of a wide variety of investments happening at different stages of the life cycle, all subject to barriers in developing countries. Moreover, the effective use of human talent in the production process is a key mediator of the effect of human capital on development. It is also a driver of human capital accumulation itself. In light of this interplay between accumulation and utilization, the paper discusses the potential role of human capital in facilitating the adaptation to global challenges such as climate change, demographic transitions, and rapid urbanization. |
| Date: | 2024–09–04 |
| URL: | https://d.repec.org/n?u=RePEc:wbk:wbrwps:10891 |
| By: | Yan Liu |
| Abstract: | This paper presents a multi-sector growth model to elucidate the general equilibrium effects of generative artificial intelligence on economic growth, structural transformation, and international production specialization. Using parameters from the literature, the paper employs simulations to quantify the impacts of artificial intelligence across various scenarios. The paper introduces a crucial distinction between high-skill, highly digitalized, tradable services and low-skill, less digitalized, less-tradable services. The model’s key propositions align with empirical evidence, and the simulations yield novel and sobering predictions. Unless artificial intelligence achieves widespread cross-sector adoption and catalyzes paradigm-shifting innovations that fundamentally reshape consumer preferences, its growth benefits may be limited. Conversely, its disruptive impact on labor markets could be profound. This paper highlights the risk of “premature de-professionalization”, where artificial intelligence likely shrinks the space for countries to generate well-paid jobs in high-skill services. The analysis portends that developing countries failing to adopt artificial intelligence swiftly risk entrapment as commodity exporters, potentially facing massive youth underemployment, diminishing social mobility, and stagnating or even declining living standards. The paper also discusses artificial intelligence’s broader implications on inequality, exploring multiple channels through which it may exacerbate or mitigate economic disparities. |
| Date: | 2024–09–17 |
| URL: | https://d.repec.org/n?u=RePEc:wbk:wbrwps:10915 |