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on Economic Growth |
| By: | de Pleijt, Alexandra; Frankema, Ewout |
| Abstract: | Since 1970, Southeast Asia’s per capita GDP grew seven-fold and headcount poverty rates declined from ca. 70 to 5%. This paper explores the 20th century schooling revolution as one of the deeper roots of this major leap in human prosperity. Using micro-data on the educational attainment and migration status of ca. 123 million individuals, subdivided across 277 provinces in eight Southeast Asian countries, we establish a strong and significant relationship between early educational attainment and sub-national economic development at the start of the 21st century. Using a wide range of historical and geographic controls, we find that higher education shares are more strongly associated with regional development outcomes than mass education. We also find a strong and robust contribution of inter-regional and international migration to human capital accumulation and long-term development. |
| JEL: | J24 O10 O40 O53 N00 |
| Date: | 2025–03 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20079 |
| By: | Le Fur, Tanguy; Wasmer, Etienne |
| Abstract: | This paper interprets the Great Divergence as the cumulative influence of small asymmetries in technology or various initial conditions, amplified through conflict over resources. It introduces a tractable framework that integrates demography, technological progress, and conflict into a unified growth model. The amplification effect of resource appropriation is characterized by conflict multipliers in both the short- and long-run. Conflict is a source of substantial divergence, as appropriation of resources allows some polities (cities, countries) to develop faster at the expense of others. Reconvergence is, however, possible through population growth, due to strategic complementarities in fertility decisions and staggered demographic transitions. Rich and non-linear dynamics display key features of comparative economic development between the West and the Global South, but also shed light on a variety of historical case studies that share such dynamics of divergence and reconvergence as well as more dramatic episodes of population extinction in a dominated country. Our framework can easily be extended to study the role of resource exhaustion or the fundamental trade-off between trade and conflict. |
| Keywords: | Conflict |
| JEL: | O11 N10 D74 F54 |
| Date: | 2025–02 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:19955 |
| By: | Radoslaw Stefanski (University of St Andrews; University of Stavanger) |
| Abstract: | Long-run growth is driven by new ideas, yet the cultural environment shaping their production is difficult to measure over time. We use large language models to read 23, 000 books from the Western canon and score whether each endorses, rejects, or merely depicts six dimensions of culture. We accumulate the scores into inherited stocks and summarize them with an Innovation Wedge measuring cultural resistance to new ideas. Between 1000 and 1920 the wedge falls by 51 percent. Blinded expert readings and modern surveys validate the measure. An independent 5, 000-book archive reproduces the decline. In a calibrated semi-endogenous growth model, the falling wedge raises 1920 productivity to 1.78 times its counterfactual level, explains two-thirds of the first sustained acceleration in productivity growth between 1500 and 1700, and accounts for 38.7 percent of productivity growth in 1920. |
| Keywords: | culture and growth; ideas production; growth accounting; innovation barriers; text as data |
| JEL: | O41 O31 N13 Z10 |
| Date: | 2026–07–23 |
| URL: | https://d.repec.org/n?u=RePEc:san:econdp:2602 |
| By: | Tiago Neves Sequeira (University of Coimbra, Faculty of Economics and CeBER) |
| Abstract: | Many frontier technologies generate both civilian and military applications, raising the question of how policies targeting one application influence innovation when knowledge is shared across sectors. This paper develops a Schumpeterian model of directed technical change in which civilian, military and dual-use technologies coexist as endogenous innovation ladders. The key innovation is to distinguish between a non-rival stock of knowledge generated by dual-use research and rival intermediate goods supplying civilian and military markets. Consequently, policy interventions in one sector redirect research incentives throughout the economy. The model admits a stable balanced-growth path with an interior allocation of research effort. A calibration based on U.S. patent stocks, aggregate R&D intensity and defence R&D expenditure illustrates the transition dynamics. Modest policy interventions substantially redirect innovation towards dual-use technologies, generating civilian knowledge spillovers while leaving long-run aggregate growth largely unchanged. |
| Keywords: | Directed technical change, dual-use innovation, endogenous growth, defense R&D, Schumpeterian growth, industrial policy |
| JEL: | O31 O32 O33 O40 H56 L16 |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:gmf:papers:2026-06 |
| By: | Fenske, James; Gupta, Bishnupriya; Mukhopadhyay, Anwesh |
| Abstract: | We review the present-day impacts of colonial rule on former colonies. Persistence exists because of multiple equilibria, path dependence, institutions, culture, knowledge, and technology. Empirical work in this literature primarily uses tools from applied econometrics, though best practices are needed to overcome the limitations of these tools. Colonial interventions relating to institutions, infrastructure, land, forced labour, the slave trade, and human capital all have measurable impacts in the present. And yet many colonial interventions have failed to persist or have led to reversals. These cases are informative about why colonial rule still matters, as are cases where precolonial influences have had persistent impacts despite, or even because of, colonial rule. |
| Keywords: | Long-run development |
| JEL: | N10 F54 P51 |
| Date: | 2025–04 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20135 |
| By: | Besley, Tim; Bogart, Dan; Chapman, Jonathan; Palma, Nuno |
| Abstract: | We show that state legal capacity contributed to economic development during the Industrial Revolution. The British parliament relied on local magistrates, known as Justices of the Peace (JPs), to enforce property rights, resolve disputes, and administer public services. Areas with greater legal capacity – more JPs – in 1700 experienced greater population growth and structural change over 140 years. More legal capacity also led to more human capital, fiscal capacity, and infrastructure development. Plausibly exogenous variation in the location of JPs supports a causal interpretation of the findings. These results illustrate the importance of street-level legal institutions for economic outcomes. |
| Keywords: | Law and economics; Industrial revolution; British industrial revolution; Historical political economy; State capacity |
| JEL: | H80 K40 N13 |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20214 |
| By: | Fouka, Vasiliki; Serlin, Theo |
| Abstract: | How does economic modernization affect group identity? Modernization theory emphasizes how labor migration led to the adoption of common identities. Yet economic development may reduce incentives to emigrate, preserving local cultures. We study England and Wales during the Second Industrial Revolution, a period characterized by the development of new industries and declines in transportation and communication costs. Using microdata on individuals’ names and migration decisions, we quantify identity change and its variation across space. We develop and estimate a quantitative spatial model in which migration and cultural identities are inter-dependent. Different components of economic modernization had different effects on identity change. Falling migration costs homogenized peripheral regions. In contrast, industrial development led to heterogeneity, increasing the overall prevalence of the culture of London, while also creating local identity holdouts by reducing out-migration from industrializing peripheries. Modernization promotes both national identities and persistent local identities in peripheral regions that industrialize. |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20193 |
| By: | Akcigit, Ufuk; Alp, Harun; Pearce, Jeremy; Prato, Marta |
| Abstract: | This paper explores the symbiotic relationship between transformative entrepreneurs and inventors, which is crucial for economic growth. We utilize microdata from Denmark to demonstrate that while the relationship between IQ and general entrepreneurship tends to be negative, it is strongly positive among transformative entrepreneurs. Transformative entrepreneurs, often with higher IQ and education levels, significantly drive R&D and business growth, thereby providing substantial opportunities for inventors. In contrast, average entrepreneurs are more influenced by their family’s entrepreneurship background. Our economic model links these dynamics to overall economic progress, highlighting how higher education influences career paths in entrepreneurship and invention. We identify talent misallocation caused by unequal education access, particularly affecting lower-income families. Our findings indicate the most effective policies strengthen the interplay between higher education, innovation, and entrepreneurship to foster transformative businesses and achieve long-run economic growth. |
| Keywords: | entrepreneurship |
| JEL: | O31 |
| Date: | 2025–04 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20185 |
| By: | Becker, Sascha O.; Panin, Amma; Pfaff, Steven; Rubin, Jared |
| Abstract: | This chapter examines the role of religion in economic development, both historically and today. Religion's influence varies globally, with high religiosity in countries like Pakistan and low rates in China. Despite declines in some Western countries, religion remains influential worldwide, with projected growth in Muslim populations due to higher fertility rates. Religion continues to shape societal norms and institutions, such as education and politics, even after its direct influence fades. The chapter explores how religious institutions and norms have impacted economic outcomes, focusing on both persistence and decline. It also examines cultural transmission, institutional entrenchment, networks, and religious competition as mechanisms sustaining religion's influence. We explore the relationship between religion and secularization, showing that economic development does not always reduce religiosity. Lastly, the chapter highlights gaps in the literature and suggests future research areas on the evolving role of religion in economic development. |
| Keywords: | Religion; Religiosity; Secularization |
| JEL: | D85 I25 J10 N30 O33 O43 P48 Z10 Z12 |
| Date: | 2025–03 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20027 |
| By: | Milet, Emmanuel; Olarreaga, Marcelo |
| Abstract: | Building on Hausmann, Hwang and Rodrik (2007), we provide a methodology to estimate the degree of inclusiveness of an export product along three economic dimensions: income equality, gender equality and formality in the labour market. Using this measure of product inclusiveness, we construct a measure of a country’s export bundle inclusiveness by taking an export-weighted sum of the product inclusiveness measure. Finally, we find that a 1 percent increase in export inclusiveness, conditional on total export value and a measure of the country’s overall inclusiveness, leads to a 0.17 percent increase in GDP per capita growth. |
| Keywords: | Economic growth |
| JEL: | F14 O1 |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20284 |
| By: | Cantoni, Davide; Yuchtman, Noam |
| Abstract: | In 2024, Daron Acemoglu, Simon Johnson, and James A. Robinson (AJR) received the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel. These three scholars were recognized “for studies of how institutions are formed and affect prosperity.†This paper reviews the contributions of these three scholars to our understanding of the institutional causes of historical and contemporary economic development. We place their work in the context of the intellectual history of the fields of economics and economic history: these authors pioneered the quantitative analysis of historical natural experiments to identify the causal effects of political institutions. We then discuss a less widely discussed contribution of their work: the identification of historically contingent causal effects. Historical contingency, we argue, is at the heart of AJR’s conceptual and empirical insights. These insights clarify transformative processes in historical development, including: (i) European colonialism; (ii) the Atlantic Trade; and, (iii) the French Revolution. More generally, they have implications for how we think about the path-dependence of political institutions and economic development: history has a long shadow, but that shadow shifts over time. |
| JEL: | N00 B00 O1 P00 |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20233 |
| By: | Comin, Diego; Lashkari, Danial; Mestieri, Marti |
| Abstract: | We document the structural transformation of innovation using historical patent data since the 1850s, along with R&D expenditure and TFP growth for the post-war period. Over time, innovation has shifted from agricultural sectors to manufacturing, and, more recently, to services. We develop and quantify a multi-sector semi-endogenous growth model of structural change in innovation and production, incorporating the classical demand-pull and technology-push drivers of innovation. Sectors differ in their innovation technologies, and the extent to which they benefit from knowledge spillovers (technology-push). Nonhomothetic demand shifts the market shares toward income-elastic sectors along the growth process (demand-pull). A calibrated version of our model replicates the structural transformations of innovation and production observed in the US data. Using the model, we evaluate the future impact of Baumol’s disease on aggregate productivity and find it to be minimal. Our results suggest that aggregate productivity growth may recover in the coming decades as the service sector becomes increasingly innovation-driven. |
| Keywords: | Innovation; Productivity |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20273 |