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on Economic Growth |
| By: | Klaus Prettner (Department of Economics, Vienna University of Economics and Business); Martin Stojanovikj (Deusto Business School, University of Deusto) |
| Abstract: | We examine how extractive institutions affect the timing of the takeoff to sustained economic growth, the pace of industrialization, and the long-run balanced growth path of an economy. The politically dominant ruling elite can choose to extract a share of output and/or to interfere with creative destruction by extracting innovation resources. In so doing, the ruling elite needs to balance its desire for grabbing a greater share of resources with the constraint of being able to stay in power. We show that the extraction from output delays the takeoff to sustained economic growth and reduces economic growth in the early industrial period. However, taken by itself, output extraction does not reduce the long-run balanced growth rate. By contrast, if the ruling elite interferes with creative destruction by extracting resources meant for innovation, it suppresses economic growth during industrialization and along the balanced growth path. After deriving the main results analytically, we calibrate the model to the U.S. economy to illustrate the adverse long-run development effects of extractive institutions. According to our results, institutions and policies that reduce the extractive power of the ruling elite can boost economic development to a substantial degree. |
| Keywords: | Extractive Institutions, Institutions and Growth, Industrial Takeoff, Schumpeterian Growth, Economic Development, Long-Run Growth, Growth Transitions |
| JEL: | O31 O40 O43 D72 P16 |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:wiw:wiwwuw:wuwp387 |
| By: | Djankov, Simeon; Melcarne, Alessandro; Ramello, Giovanni B.; Spruk, Rok |
| Abstract: | We investigate how timeliness in enforcing legal contracts affects economic growth across countries. We focus on judicial timeliness as a proxy for courts’ performance in a large panel of 169 countries over the 2004–2019 period. We show that, by raising uncertainty and promoting opportunistic behaviors in business transactions, slower courts hinder economic development. The relationship is robust to diverse model specifications and appears stronger for business environments more heavily relying on judiciaries such as economies undergoing rapid growth, countries characterized by low human capital and civil law jurisdictions. |
| Keywords: | economic growth; institutions; judicial timeliness |
| JEL: | K41 H40 |
| Date: | 2025–10–31 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:129551 |
| By: | Jung, Yeonha; Kim, Minki (University of Mannheim); Lee, Munseob (University of California, San Diego) |
| Abstract: | This study examines the long-term impact of Hyanggyo, state-sponsored educational institutions established during the early Joseon Dynasty in Korea (1392-1592), on human capital accumulation. Although these schools largely ceased functioning as educational centers by the late 16th century, their influence has endured to the present day. Drawing on a newly constructed township-level dataset, we find a robust positive association between historical exposure to Hyanggyo and modern educational attainment. This relationship appears to be driven by enduring local demand for education, supported by three complementary findings. First, regions with greater historical exposure experienced larger gains in Japanese literacy during colonial era school expansions. Second, residents in these areas express stronger pro-education attitudes today. Third, historically exposed regions exhibited lower fertility rates, consistent with a quantity–quality tradeoff in parental investment. Together, our findings highlight the lasting legacy of early educational institutions. |
| Keywords: | Hyanggyo, Human capital, historical institutions, Joseon, cultural transmission |
| JEL: | I23 J24 N35 O15 |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp18123 |
| By: | Erik Brynjolfsson; Anton Korinek; Ajay K. Agrawal |
| Abstract: | As we approach Transformative Artificial Intelligence (TAI), there is an urgent need to advance our understanding of how it could reshape our economic models, institutions and policies. We propose a research agenda for the economics of TAI by identifying nine Grand Challenges: economic growth, innovation, income distribution, decision-making power, geoeconomics, information flows, safety risks, human well-being, and transition dynamics. By accelerating work in these areas, researchers can develop insights and tools to help fulfill the economic potential of TAI. |
| JEL: | A11 O33 O40 |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34256 |
| By: | Jihyuan Liuh |
| Abstract: | Building on the classical Okishio theorem, we construct a two-sector, multi-period dynamic model that relaxes the rigid assumption of a fixed real wage and introduces an endogenous wage-growth mechanism together with a process of technology diffusion. Through analytical derivations and numerical simulations we find that the long-run trajectory of the profit rate is not unique: it hinges on the relative strength of the speed of wage adjustment and the potency of technical progress. (1) When wage adjustment is relatively sluggish, the technical effect dominates and the profit rate trends upward. (2) When wage adjustment proceeds at a moderate pace, the profit rate first rises and then falls. (3) When wage adjustment is extremely rapid, the wage effect dominates and the profit rate declines continuously. The results offer a new theoretical lens on the intricate interplay among technical change, wage dynamics and profitability. |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2509.11538 |