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on Economic Growth |
| By: | Oded Galor; Marc Klemp; Daniel C. Wainstock |
| Abstract: | What gave rise to the mosaic of cultural expressions across the globe? Why are some societies more culturally diverse than others? This study develops a unified theory of cultural evolution, characterizing the forces that have governed this process over the course of human existence. The research advances the hypothesis that population movements and socioeconomic transformations generated a mismatch between inherited cultural traits and prevailing ecological and societal conditions, setting in motion an evolutionary process governed by adaptation-based vertical transmission, horizontal diffusion, and fitness-based evolutionary selection. The theory generates novel testable predictions concerning the origins of the global cultural mosaic and the cross-societal variation in cultural diversity. First, greater ecological distance between ancestral environments generated greater cultural distance across societies. Second, prehistoric differences in ancestral diversity contributed to divergent adaptive capacity and greater cultural distance. Third, societies descended from more diverse prehistoric populations exhibit greater cultural diversity despite convergence induced by adaptation to a common environment and societal norms. Drawing on measures of cultural distance and diversity derived from folkloric and musical traditions among ethnic groups, visual representations of common concepts, and the dispersion of norms, values, and attitudes, the empirical analysis lends credence to the predictions of the theory. |
| Keywords: | cultural diversity, adaptation, fitness, cultural evolution, vertical transmission, social norms |
| JEL: | O10 Z10 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12928 |
| By: | Oded Galor |
| Abstract: | The Royal Swedish Academy of Sciences awarded the 2025 Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel to Philippe Aghion, Peter Howitt, and Joel Mokyr "for having explained innovation-driven economic growth". This paper examines their contributions in the context of the development process as a whole. Aghion and Howitt established the centrality of creative destruction in the growth process of advanced economies, identifying the displacement of existing technologies by superseding ones as a key mechanism in sustaining economic growth. Mokyr highlighted the role of a tightening link between theoretical knowledge and practical application during the Scientific Revolution and the Enlightenment in fostering technological progress in Western Europe on the eve of the Industrial Revolution. These frontier-centered perspectives transformed our understanding of the causes and consequences of innovation-driven growth in advanced economies operating near the technological frontier. Yet, throughout much of the development process, the central challenge to growth has depended less on the creation of new technologies than on the emergence of fundamental conditions conducive to skill formation, fertility decline, and societal adaptation, which have shaped the timing of the transition to modern growth, the pace of economic growth thereafter, and the contemporary inequality in the wealth of nations. A comprehensive account of sustained growth and contemporary inequality across societies requires anchoring the growth process in its broader historical arc. |
| Keywords: | Growth, Innovation, Inequality, Unified Growth Theory, Human Capital, Demographic Transition |
| JEL: | O10 O40 Z10 |
| Date: | 2026–06 |
| URL: | https://d.repec.org/n?u=RePEc:crm:wpaper:26173 |
| By: | Ren, Yongwang; Bergtold, Jason; Seth, Zander; Thompson, Nick |
| Abstract: | We propose a modeling framework that integrates all 7 community capitals, interactions between the capitals, and influence of capitals on community economic growth. We built a large panel dataset of capital indicators and community economic growth at county-year level. Using this dataset, we first conduct principal component analysis and analyze the spatial distribution of each community capital component. Secondly, we apply structural equation modeling (SEM) and estimate a fixed-effect model based on the results of measurement model of SEM. Our results suggest differences of community capital stock across urban and rural areas. We also find potential connections between community capitals and economic growth. |
| Keywords: | Community/Rural/Urban Development |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ags:aaea26:404761 |
| By: | O'Mahony, Mary; Weale, Martin |
| Abstract: | We show how to decompose the contribution made by capital services to eco nomic growth into two components, depreciation services and net capital services. We apply this to examine the contributions to economic growth by depreciation and net capital services of both tangible and intangible investment. Looking at France, Germany, the UK and the US from 1997 to 2019, we find that while overall capital services contributed between 0.6 (Germany) and 1.4 (US) percentage points to growth in GVA, net of depreciation the contributions ranged from 0.1 (Germany) to 0.5 (US) percentage points. Looking only at intangibles we find gross contributions of 0.3 (Germany) to 0.7 (US) percentage points while net of depreciation the contributions of intangibles were 0.1 (Germany) to 0.2 (US) percentage points. We conclude that a focus on gross output overstates the importance of intangible capital in these economies. |
| Keywords: | Intangible Capital; Depreciation; Capital Services; Economic Growth; Growth Accounting |
| JEL: | C43 D24 E22 O34 O47 |
| Date: | 2026–06–10 |
| URL: | https://d.repec.org/n?u=RePEc:eoe:escoed:escoe-dp-2026-06 |
| By: | Kshitiz Shrestha (International Center for Public Policy, Georgia State University); Hyojung Kang (International Center for Public Policy, Georgia State University); Jorge Martinez-Vazquez (International Center for Public Policy, Georgia State University) |
| Abstract: | Inclusive growth has emerged as a central concept in both academic research and development policy, yet the literature remains fragmented across definitions, dimensions, and measurement approaches. This paper provides a comprehensive and critical review of the inclusive growth literature, tracing its conceptual evolution from pro-poor growth origins to its current multidimensional interpretation. It synthesizes the key dimensions that emerge consistently across definitions and identifies four core components of inclusive growth - sustained economic growth as a necessary foundation, equitable access to opportunities, broad sharing of growth's benefits, and multidimensional well-being and environmental sustainability. The paper also reviews and evaluates principal approaches used to measure inclusive growth against a common set of principles drawn from the literature. In addition, it situates inclusive growth within the broader post-growth debate, engaging with frameworks that questions the role of economic growth for long-run human welfare. While post-growth perspectives offer valuable normative insights, inclusive growth remains a practical and policy-relevant framework given its ability to incorporate growth while explicitly addressing distributional and welfare concerns. |
| Date: | 2026–08 |
| URL: | https://d.repec.org/n?u=RePEc:ays:ispwps:paper2627 |
| By: | Timo Boppart; Peter J. Klenow; Reiko Laski; Huiyu Li |
| Abstract: | Which firms drive aggregate productivity growth? We document that firms with high price-earnings ratios tend to see increases in their subsequent earnings relative to sales, which we interpret as rents from ideas (innovation). We construct an endogenous growth model with shocks to firm innovation step-sizes and R&D efficiency and calibrate it to match patterns in the data. The model implies that growth would be much lower, even with the same innovative effort, if firms had the same step sizes. The model can be used to infer expected growth contributions of individual firms (such as members of the Magnificent Seven). We find that the share of growth coming from smaller listed firms substantially exceeds their sales share, whereas the largest listed firms account for less than their sales share. |
| JEL: | L11 O31 O41 |
| Date: | 2026–08 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35594 |
| By: | Imam, Patrick; Temple, Jonathan |
| Abstract: | We investigate the existence of a middle-income trap using finite state Markov chains, constant growth thresholds, and mean first passage times. As well as studying output per head, we examine the dynamics of its proximate determinants: TFP, the capital-output ratio, and human capital. We find upwards mobility for the relative capital-output ratio and human capital, but not for relative TFP. The lack of upwards mobility in relative TFP, at least from an intermediate level, suggests that escaping the middle-income category can take many years. A middle-income trap may become increasingly apparent in the years to come. |
| Date: | 2024–08 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:19346 |
| By: | Juhász, Réka; Sakabe, Shogo; Weinstein, David |
| Abstract: | This paper examines the global adoption of technology in the late nineteenth century. We construct several novel datasets to test the idea that the codification of technical knowledge in the vernacular was necessary for countries to absorb the technologies of the First Industrial Revolution. We find that comparative advantage shifted to industries that could benefit from these technologies in countries and colonies with access to codified technical knowledge, but not in other regions. Using the rapid and unprecedented codification of technical knowledge in Meiji Japan as a natural experiment, we show that this pattern emerged only after the Japanese government codified vast amounts of technical knowledge. Our findings shed new light on the frictions associated with technological diffusion and offer a novel explanation for why Meiji Japan was unique among non-Western countries in successfully industrializing during the first wave of globalization. |
| Keywords: | Industrialization; Technology adoption; Development; Productivity; Industrial policy; Japan |
| JEL: | F14 F63 N15 |
| Date: | 2024–07 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:19208 |