Post on 22-Dec-2015
transcript
Some figures
Last millennium: World population growth = 22-fold Income per capita growth = 13-fold World GDP growth = 300-fold
1000-1820 Income per capita growth = 50% Life expectancy = 24 years
1820 onwards: Income per capita growth = 8-fold Life expectancy now = 66 years
No consensus
Economic growth models have attempted to explain the change in growth rates but no consensus has emerged.
Regularities – modern times Per capita output grows over time and its
growth rate does not tend to diminish
Physical capital per worker grows over time
The shares of labor and physical capital in national income are nearly constant
The growth rate of output per worker differs substantially across countries.
Divergence
Modern economic growth: Divergence in relative productivity levels and living
standards. In the last century: income in the “less” developed countries
have fallen far behind those in “developed” countries.
Developed countries: Strong convergence in per capita incomes within these
countries No obvious acceleration of overall growth rates over time.
What we see in the data
Variability of growth rates over time
Variability of growth rates between countries
Convergence in richer countries
Growth rates over timeAnnual Growth Rates by decade
-3.0%
-2.0%
-1.0%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
1870 1880 1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990
US Italy Argentina
Growth between countriesGDP per capita
1990 International Geary-Khamis dollars
0
5000
10000
15000
20000
25000
30000
1 1000 1500 1600 1700 1820 1900 1950 2000
Western EuropeWestern OffshootsAsia AfricaWorldLatin America
Convergence clubConvergence: GDP per capita
- Western Europe & Western Offshoots-
0
5,000
10,000
15,000
20,000
25,000
30,000
1870
1876
1882
1888
1894
1900
1906
1912
1918
1924
1930
1936
1942
1948
1954
1960
1966
1972
1978
1984
1990
1996
Denmark
France
Germany
Italy
Sw itzerand
United Kingdom
Australia
Canada
United States
Making a miracle by Lucas
GDP per capita growth (1960-2000)Philippines: 62%South Korea: 1200%
GDP per capita growth, annual rate (1960-2000)Philippines: 1.2%South Korea: 6.6%
East Asian miracle
Features Large exporters of manufactured goods of
increasing sophistication. Highly urbanized and increasingly well-educated. High savings rates. Pro-business governments.
Human capital
The main engine of growth Main source of differences in living standards
among nations. Physical capital plays an essential but
subsidiary role. Expansion of the definition of HK: not only
formal education but on the job.
Lucas’ contribution
Human capital: additional input in production
Labor force can accumulate human capital
Accumulation of human capital involves a sacrifice of current utility
Why isn’t the whole world developed? By Easterlin Spread of economic growth depended on the
diffusion of knowledge of new production techniques.
Acquisition of knowledge closely associated with formal schooling.
The expansion and establishment of formal schooling has depended in large part on political conditions and ideological influences.
Since WWII, modern education systems have been established almost everywhere
=> spread of modern economic growth accelerated.
Slow spread of economic growth Why has technological change been limited
to so few nations? Transfer of technology as an educational
process: Teachers’ side: readily access to new technology. Students’ side: no native differences among
nations in the native intelligence of their populations.
Problem: different incentives for learning.
Growth and schooling
The more schooling, the easier to master new technological knowledge.
Significant increases in formal schooling
=> improvement in the incentive structure.
Primary enrolment per 10,000
0
500
1000
1500
2000
2500
1830 1850 1882 1900 1910
USAUKArgentinaMexicoJapan
Education and growth
More advanced nations educationally developed first.
Cause-effect: effect of education on economic growth or vice-versa?
The political economy of growth
Political roots to mass education Colonialism Monarchical rule Catholic Church
Conclusions and predictions
Expansion of formal schooling: positive shift in the incentive structure
Commitment to mass education: Symptom of major shift in political power Greater social mobility
Once developing countries complete their demographic transition: long-term per capita growth as high as in developed countries.
Easterlin’s contributions
Three aspects of knowledge facilitate growth
new knowledge is complementary to existing knowledge.
knowledge is non-rival.
knowledge is only partially excludable.