EC120 week 02, topic 1, slide 1 A long-term perspective of economic development Topics: • Trends and fluctuations in economic well-being • Economic development in the really long-run • Eurasian landmass versus the rest • Economic approaches and categories • The role of institutions • Population and economic development – The Great Pestilence, a demographic catastrophe – The Malthusian model of population • Summing up: determinants of economic well-being
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EC120 week 02, topic 1, slide 0 A long-term perspective of economic development Topics: Trends and fluctuations in economic well-being Economic development.
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EC120 week 02, topic 1, slide 1
A long-term perspective of economic development
Topics:• Trends and fluctuations in economic well-being• Economic development in the really long-run• Eurasian landmass versus the rest• Economic approaches and categories• The role of institutions• Population and economic development
– The Great Pestilence, a demographic catastrophe
– The Malthusian model of population• Summing up: determinants of economic well-
being
EC120 week 02, topic 1, slide 2
Economic development in the really long-run
• Geology and climate uneven distribution of wild plants and animals; diffusion more likely across similar latitudes
• Settled agriculture displaced hunter/gatherer groups in some places higher population densities
Population and economic development (1)The Great Pestilence, now known as “The Black
Death”:
• “… greatest catastrophe to strike the Western World during the last millennium …”
• Infectious disease(s) that arrived in Europe from Asia, 1348/51, killing 1/4 to 1/3 of population
• Major economic, social and political consequences
• “The path to the Industrial Revolution began with the Black Death” (R.C.Allen)
EC120 week 02, topic 1, slide 10
Population and economic development (2)
• Population in pre-industrial societies:– Long-term growth rate positive but negligible– Large fluctuations persisted for centuries– Mortality sensitive to disasters– Fertility differed substantially across societies– Technological progress (slow) ->
per capita income grows (slowly)
EC120 week 02, topic 1, slide 11
Population and economic development (3)
• Malthusian model: a theory of population1. Birth rates vary positively with income (“preventive
check”)2. Death rates vary negatively with income (“positive
check”)3. Population growth forces a decline of income (per
capita)
• Identifies fundamental resourceconstraints
• But– Responsiveness of births & deaths
to income may be low– The model neglects inequalities
within societies
Population and economic development (4)
• Demographic Revolution– Increased growth rate from about 1750
• Demographic Transition– Fertility decline, depending on level of
development
EC120 week 02, topic 1, slide 12
The figure illustrates the Demographic Revolution (high births, declining deaths) followed by the Demographic Transition (falling births, low deaths).
EC120 week 02, topic 1, slide 13
Summing up: determinants of economic well-being
A handy classification:
a) Environment and resources
b) Culture, philosophy and religion
c) Institutions: political, social & economic institutions