Recent Developments in the Theory of Very Long Run Growth: A Historical Appraisal

Abstract

This paper offers a historical appraisal of recent developments in the theory of very long run growth, focusing on three main areas: (1) linkages between wages, population and human capital (2) interactions between institutions, markets and technology and (3) sustaining the process of economic growth once it has started. Historians as well as economists have recently begun to break away from the traditional practice of using different methods to analyse the world before and after the industrial revolution. However, tensions remain between the theoretical and historical literatures, particularly over the unit of analysis (the world or particular countries) and the role of historical contingency.I thank Nick Crafts, Oded Galor, Sayantan Ghosal, Omer Moav, Joel Mokyr, Eugenio Proto, Joachim Voth and participants in conference or seminar presentations at Barcelona, Brunel, Florence, Glasgow, Helsinki and Royal Holloway for helpful comments and discussions. I am grateful to Paolo Malanima for making available unpublished data.

The 2008 Lawrence R. Klein Lecture—comparative Economic Development: Insights From Unified Growth Theory*

“…2 2 The transition from stagnation to growth is explored by Galor and Weil (1999, 2000), Fernandez‐Villaverde (2001), Jones (2001), Galor and Moav (2002), Hansen and Prescott (2002), Lucas (2002), Doepke (2004), Galor (2005), Lagerlof (2006), O'Rourke et al (2008), as well as others. The association of this transition with the divergence in income per capita across regions of the world is examined by Galor and Mountford (2006, 2008), Voigtlander and Voth (2006), Broadberry (2007), Ashraf and Galor (2009), and Galor et al (2009). …”

Capital substitution in an industrial revolution

“…As a further check on the path of income and prices, we note that according to Broadberry () the average grain‐wage in England between 1550 and 1700 was 5.23 kg of wheat per day. That rose to an average of 8.6 kg of wheat per day between 1800 and 1849, which implies a ratio of 8.6/5.23 = 1.64.…”

Economic History Matters

“…For historians, more facts would again include historical national accounts noting that estimates of income levels can now be extended far back in time (Broadberry, 2011) and better facts using econometric techniques would naturally include estimates of real wages over the long-run based on samples drawn from various primary sources processed by regression analysis (Clark, 2005). Better hypotheses come from asking interesting questions and specifying the ceteris paribus well; here an excellent example turns on the role of relative factor prices in the development and diffusion of new technologies (Allen, 2009;Magee, 2004) along the lines now highlighted in models of directed technological change and inappropriate technology (Acemoglu, 1998;Acemoglu and Zilibotti, 2001).…”