Unified Growth Theory and Comparative Economic Development

The Process of DevelopmentUnied Growth Theory

The TheoryComparative Development: Deep Rooted Factors

Hurdles for Human Capital Formation

Unied Growth Theory and Comparative EconomicDevelopment

Kuznets Lecture, Yale University

Oded Galor

April 16, 2009

Oded Galor Unied Growth Theory and Comparative Economic Development Kuznets Lecture, Yale University




Outline

The Complexity of the Process of Development

Unied Growth Theory (UGT)

Implications of UGT for Comparative Development





Outline

Deep rooted factors in comparative development:

The Out of Africa Hypothesis and Comparative Development:

Migratory distance from the geographical origins of Homo sapi-ensGenetic Diversity

=) contemporary variations in economic development

The Neolithic Revolution (NR)

Time elapsed since the NR has a signicant e¤ect on contem-porary variations in life expectancy and income per capita





Outline

Hurdles for human capital formation:

International Trade:

Asymmetric e¤ects on the composition of population and thepace of the transition from stagnation to growth in DCs andLDCs

Inequality in land ownership:

Delays in the implementation of human capital promoting insti-tutions and economic development





The Malthusian EpochThe Post-Malthusian RegimeThe Modern Growth RegimeMajor PuzzlesInconsistency of Non-Unied Growth Theories

Human Time Line






The Complexity of the Process of Development

The Malthusian Epoch

Developed Countries 100; 000 BCE - 1750LDCs 100; 000 BCE - 1900

The Post Malthusian Regime

Developed Countries 1750 - 1870LDCs 1900 -

The Modern Growth Regime

Developed Countries 1870 - presentLDCs






World Income per Capita: 0-2000

GDP Per Capita

300

1300

2300

3300

4300

5300

6300

0 250 500 750 1000 1250 1500 1750 2000

GDP

Per

Cap

ita(1

990

Int'l

$)

6049409121111525875667615595566436445GDP20011973195019131870182017001600150010000Year6049409121111525875667615595566436445GDP20011973195019131870182017001600150010000Year






Regional Income per Capita, 0-2000

0

4000

8000

12000

16000

20000

24000

0 250 500 750 1000 1250 1500 1750 2000

GD

P P

er C

apita

(199

0In

t'l $

)

Western Europe Western Offshoots AsiaLatin America Africa Eastern Europe






The Malthusian Epoch

Population growth is positively a¤ected by the level of incomeper capita

Technological progress exits but it is slow and it results in aproportional increase in output and population

Output per capita uctuates around a constant (subsistence)level






Malthusian Fluctuations in GDP Per Capita: England, 1260-1800






Malthusian Relationship between Income and Population: England 1250-1750

0

20

40

60

80

100

120

140

160

180

200

1255 1295 1335 1375 1415 1455 1495 1535 1575 1615 1655 1695 1735

Rea

l Far

m W

ages

(177

5=10

0)

0.00

1.00

2.00

3.00

4.00

5.00

6.00

7.00

Popu

latio

n (m

illion

s)

Population

Real Wages






Testable Implications

Variations in technology and land quality across countries willbe reected primarily in variation in population density:

Technological superiority will result primarily in higher popula-tion density without any sizable e¤ect on income per-capita inthe long-run

Superior land quality will result primarily in higher populationdensity without any sizable e¤ect on income per-capita in thelong-run






Determinants of Population Density in 1500 CE

(1) (2) (3) (4) (5) (6)OLS OLS OLS OLS OLS IV

Dependent Variable: Log population density in 1500 CELog years since Neolithic 0.827 1.024 1.087 1.389 2.077

(0.299)*** (0.223)*** (0.184)*** (0.224)*** (0.391)***

Log land productivity 0.584 0.638 0.576 0.573 0.571(0.068)*** (0.057)*** (0.052)*** (0.095)*** (0.082)***

Log absolute latitude -0.426 -0.354 -0.314 -0.278 -0.248(0.124)*** (0.104)*** (0.103)*** (0.131)** (0.117)**

Distance to nearest -0.392 0.220 0.250coast or river (0.142)*** (0.346) (0.333)

% land within 100 km 0.899 1.185 1.350of coast or river (0.282)*** (0.377)*** (0.380)***

Continental dummies Yes Yes Yes Yes Yes YesObservations 148 148 148 147 96 96R2 0.40 0.60 0.66 0.73 0.73 0.70First-stage F-statistic 14.65Overident. p-value 0.44

Notes: Robust standard errors in parentheses; *** p<0.01, ** p<0.05, * p<0.1Source: Ashraf and Galor (2008)






Timing of Neolithic and Population Density in 1500 CE

Conditional on land productivity, geographical factors, and continental xed e¤ects






Land Productivity and Population Density in 1500 CE

Conditional on transition timing, geographical factors, and continental xed e¤ects






E¤ects on Income Per Capita versus Population Density

OLS OLS OLS OLS OLS OLS(1) (2) (3) (4) (5) (6)Log Income Per Capita in Log Population Density in

1500 CE 1000 CE 1 CE 1500 CE 1000 CE 1 CE

Log years since Neolithic 0.159 0.073 0.109 1.337 0.832 1.006

(0.136) (0.045) (0.072) (0.594) (0.363) (0.483)

Log land productivity 0.041 -0.021 -0.001 0.584 0.364 0.681

(0.025) (0.025) (0.027) (0.159) (0.110) (0.255)

Log absolute latitude -0.041 0.060 -0.175 0.050 -2.140 -2.163

(0.073) (0.147) (0.175) (0.463) (0.801) (0.979)

Distance to nearest 0.215 -0.111 0.043 -0.429 -0.237 0.118coast or river (0.198) (0.138) (0.159) (1.237) (0.751) (0.883)

% land within 100 km of 0.124 -0.150 0.042 1.855 1.326 0.228coast or river (0.145) (0.121) (0.127) (0.820) (0.615) (0.919)

Continental dummies Yes Yes Yes Yes Yes YesObservations 31 26 29 31 26 29R2 0.66 0.68 0.33 0.88 0.95 0.89

Notes: Robust standard errors in parentheses; *** p<0.01, ** p<0.05, * p<0.1Source: Ashraf and Galor (2008)






Transition Timing and Population Density in 1500 CE







Transition Timing and Income Per Capita in 1500 CE







Land Productivity and Population Density in 1500 CE







Land Productivity and Income Per Capita in 1500 CE







The Post-Malthusian Regime

Economies take-o¤ from a Malthusian equilibrium:

Population growth is still positively a¤ected by the level of in-come per capita

Technological progress accelerates and it results in a larger in-crease in output than in population

Income per capita and population grow at an increasingly fasterpace






Regional Variation in the Timing of the Take-o¤: Early Take-O¤

0

4000

8000

12000

16000

20000

24000

28000

1700 1750 1800 1850 1900 1950 2000

GDP

Per C

apita

(199

0 Int'

l $)

Western Europe Western Offshoots






Regional Variation in the Timing of the Take-o¤: Late Take-O¤

0

1000

2000

3000

4000

5000

6000

1700 1750 1800 1850 1900 1950 2000

GDP

Per C

apita

(199

0 Int'

l $)

Asia Latin America Africa






Growth of GDP Per Capita and Population: Western Europe, 1500-2000

Western Europe

0

0.5

1

1.5

2

2.5

3

1500 1600 1700 1800 1900 2000

Perc

ent G

row

th R

ates output growth

population growth






Growth of GDP Per Capita and Population: Western O¤shoots, 1500-2000

Western Offshoots(US, Canada, Australia, New Zeland)

0

0.5

1

1.5

2

2.5

3

1500 1600 1700 1800 1900 2000

Perc

ent G

rowt

h R

ates

output growthpopulation growth






Growth of GDP Per Capita and Population: Latin America 1500-2000

Latin America

0

0.5

1

1.5

2

2.5

3

1500 1600 1700 1800 1900 2000

Perc

ent G

row

th R

ates







Growth of GDP Per Capita and Population: Africa 1500-2000

Africa

0

0.5

1

1.5

2

2.5

3

1500 1600 1700 1800 1900 2000

Perc

ent G

rowt

h Rat

es







Growth of GDP Per Capita and Population: Asia, 1500-2000

Asia (excluding Japan)

0

0.6

1.2

1.8

2.4

3

3.6

1500 1600 1700 1800 1900 2000

Perce

nt Gr

owth

Rate

s







Industrialization: Developed Economies

0

100

200

300

400

500

600

700

1750 1800 1850 1900 1950 2000

Per C

apita

Indu

stria

lizat

ion

.

USA Germany Canada United Kigdom France Japan






Industrialization: Less Developed Economies

1

6

11

16

21

26

31

36

41

1750 1800 1850 1900 1950 2000

Per C

apita

Indu

stria

lizat

ion .

Third World India China Mexico






The Modern Growth Regime

Technological progress accelerates

The demand for human capital increases

Population growth declines The Demographic Transition

Gains in output are not counterbalanced by population growth

Output per capita grows at a high sustainable level






Timing of the Demographic Transition across Regions: Early Transition

Early Demographic Tansition

0

0.5

1

1.5

2

2.5

3

1750 1800 1850 1900 1950 2000

Rate

of P

opul

atio

n G

rowt

h

Western Europe Western Offshoots Eastern Europe






Timing of the Demographic Transition across Regions: Late Transition

Late Demographic Transition

0

0.5

1

1.5

2

2.5

3

1750 1800 1850 1900 1950 2000

Rat

e of

Pop

ulat

ion

Gro

wth

Latin America Asia Africa






Divergence in Income per Capita

0

4000

8000

12000

16000

20000

24000

28000

1820 1870 1913 1950 1998

GDP

PerC

apita

Western Offshoots

Western Europe

Latin America

AsiaAfrica

Eastern Europe






Divergence in Population: Africa and Latin America Vs. Western Europe

0

200

400

600

800

1870 1890 1910 1930 1950 1970 1990

Pop

ulat

ion

(Mill

ions

)

W estern Europe Latin Am erica Africa






Divergence in Population: Asia Vs. Western Europe

0

900

1800

2700

3600

1870 1890 1910 1930 1950 1970 1990

Pop

ulat

ion(

Mill

ions

)

Western Europe Asia






Sustained Growth: Western Europe and Western O¤shoots, 1870-2001

1870 1890 1910 1930 1950 1970 1990

Log

GD

P Pe

r Cap

ita

Western Europe Western Offshoots






Growth of Income Per Capita: Africa, Asia and Latin America, 1950-2001

1950 1960 1970 1980 1990 2000

Log

GD

P P

er C

apita

Asia

Africa

Latin America






Major Puzzles

Context: The Malthusian Epoch

What accounts for the epoch of stagnation that characterizedmost of human history?

Why had episodes of technological progress in the pre-industrializationera failed to generate sustained economic growth?

Why has population growth counterbalanced the expansion ofresources per capita that could have been generated by tech-nological progress?






...Major Puzzles

Context: The Transition from Stagnation to Growth

What is the origin of the sudden spurt in growth rates of outputper capita and population?

What triggered the demographic transition?

Is a demographic transition critical for the transition to a stateof sustained economic growth?

What accounts for the transition from stagnation to growth ofthe currently DCs and what are the implications of these factorsfor the hurdles faced by LDCs in their attempt to transit intoa sustained growth regime?






...Major Puzzles

Context: Comparative Development

What accounts for the sudden take-o¤ from stagnation to growthin some countries and the persistent stagnation in others?

What governs the di¤erential timing of the demographic tran-sition across the globe?

What accounts for the great divergence in per capita incomeacross countries in the past two centuries?

Has the transition to a state of sustained economic growth inadvanced economies adversely a¤ected the process of develop-ment in less-developed economies?






Inconsistency of non-UGT with the Growth Process

Inconsistent with the qualitative aspects of the growth processduring the Malthusian epoch and the Post-Malthusian Regime

Limited to the modern growth regime a miniscule fraction (0.1%)of the entire process of development

Do not capture the forces that brought about the transition ofdeveloped countries from stagnation to growth and hence unable toshed light of the hurdles faced by LDCs in their attempt to take-o¤to a state of sustained economic growth

Unable to capture fundamental forces that led to sustaineddi¤erences in income per-capita across countries






Lessons from other Scientic Disciplines

The evolution of theories in older scientic disciplines suggests thattheories that are founded on the basis of a subset of existing observa-tions and their driving forces, may be attractive in the short run, butnon-robust and ultimately non-durable in the long run (e.g., ClassicalThermodynamics)

Attempts to develop unied theories in Physics (e.g., Unied FieldTheory) have been based on the conviction that all physical phenom-ena should ultimately be explainable by some underlying unity

The entire process of development and its fundamental forces oughtto be captured by a unied growth theory





The Fundamental ChallengesContributionsVirtues of Unied Growth TheoryCharacteristics of the Main Transitions

The Fundamental Challenges

Development of a unied growth theory that accounts for:

An epoch of Malthusian stagnation

Take-o¤ to a Post-Malthusian Regime

Emergence of human capital formation

Demographic transition

A shift to sustained economic growth






...The Fundamental Challenges

Two dimensions of unication:

Unifying the entire process of development

Unifying the micro structure of the economy(i.e., the structure of preferences and technologies remain un-changed, but endogenous changes in the economic environmenttriggers di¤erent choices in di¤erent stages of development)







A dynamical system that permits an escape from a stableMalthusian Steady-State:

A major shock in an environment characterized by multiple lo-cally stable equilibria(inconsistent with evidence of a gradual transition (Crafts))

A gradual escape from an absorbing (stable) equilibrium(contradiction to the essence of a stable equilibrium)







Methodological innovation:

Phase transition via the evolution of latent state variables thatultimately a¤ects the qualitative properties of the dynamicalsystem

Although output per capita remains unchanged, the evolution of la-tent state variables (technology and population) ultimately changesthe dynamical system qualitatively, the Malthusian equilibrium van-ishes endogenously, leaving the arena to the gravitational forces ofthe emerging Sustained Growth Regime






Contributions

Underlying Philosophy:"Towards a Unied Theory of Economic Growth: Oded Galor on theTransition from Stagnation to Growth," An interview by BrianSnowdon (World Economics, 2008)

Foundations:Galor (HB of Ec. Growth, 2005), Galor and Weil (AER 1999, AER2000)

Other Contributions:Hansen and Prescott (AER 2002), Doepke (JEG 2004), ORourke etal. (2008)

Human Evolution and Economic Development:Galor and Moav (QJE 2002, 2007), Ashraf and Galor (2008)






...Main Contributions

UGT and Comparative Development:Galor and Mountford (AER 2006, RES 2008), Galor, Moav and Voll-rath (RES 2009), Voigtländer and Voth (JEG 2006), Ashraf and Galor(2007, 2008)

Calibrations:Jones (2001), Doepke (JEG 2004), Fernandez-Villaverde (2005) Lagerlof(2006)

Origins of IndustrializationLucas (2002), Stokey (2002), Broadberry (2007), Crafts and Mills(2007), Mokyr and Voth (2007)






Virtues of Unied Growth Theory

Sheds light on historical and contemporary patterns of devel-opment

Identies the forces the permitted the currently developed econ-omy to transit from an epoch of Malthusian stagnation to sus-tained economic growth

Uncovers the hurdles faced by LDCs in their transitions fromstagnation to growth

Derives policies that may expedite the transition of LDCs tosustained economic growth






...Virtues of Unied Growth Theory

Demonstrates the critical role played by the demographic tran-sition and the emergence of the demand for human capital inthe shift to modern growth

Identies the micro-foundations - the central driving forces - forthe main aspects of the growth process

provides a meta-theory that encompasses existing hypothesisabout the role of geography, institutions, and the compositionof human traits, in comparative development






Suggestive Evidence: Characteristics of the Main Transitions

Transition from Malthusian to Post-Malthusian Regime:

Faster rates of technological progressFaster rate of population growth

Transition from the Post-Malthusian to Modern Growth Regime:

Faster rate of technological progressFaster rate of human capital accumulationDecline in population growth






Suggestive Evidence

A solution to these fundamental puzzles may be hidden there-fore in the understanding of how:

changes in the technological environment a¤ects the populationsize and its quality.

the size and the quality of the population a¤ect the rate oftechnological progress





Main Elements and MechanismThe ModelThe Dynamical SystemImplicationsUGT and Comparative Development

Main Elements

The Malthusian Structure

Sources of Technological Progress

Origins of Human Capital Formation

Triggers of the Demographic Transition






The Malthusian Structure

A subsistence consumption constraint

Positive e¤ect of income on population

reecting households optimization

Output per capita is stationary

reecting diminishing returns to labor in agriculture and a pos-itive e¤ect of income on population






Sources of Technological Progress

Early stage of development

Population size positively a¤ects technological progress via:

Supply of innovations

Demand for innovations

Di¤usion of knowledge

Division of labor

Extent of trade






...Sources of Technological Progress

Later Stages of Development

Human capital positively a¤ects technological progress

Educated individuals have a comparative advantage inadopting and advancing new technologies (Nelson and Phelps(1966), Schultz (1970), Foster and Rosenzweig (1996)






Origins of Human Capital Formation

The increase in the rate of technological progress increases thedemand for human capital

Human capital permits individuals to better cope with the changesin the technological environment

Schultz (1970), Foster and Rosenzweig (1996)






Triggers of the Demographic Transition

The rise in the demand for human capital in the second phase ofIndustrialization induces parents to substitute quality for quan-tity of children (Rosenzweig and Wolpin (1980))

The rise in income along with the rise in the potential returnto human capital generates:

An income e¤ect - more income to spend on children

Substitution e¤ects -

the opportunity cost of raising children increasesthe potential return to investment in childrens human capitalincreases






...Triggers of the Demographic Transition

Early part of the second phase of industrialization:

The income e¤ect dominates and population growth and humancapital formation increases

The subsistence consumption constraint (that adversely a¤ectresources devoted to children) has a larger e¤ect at low levelsof income

The demand for human capital is moderate






...Triggers of the Demographic Transition

Later part of the second phase of industrialization:

The substitution e¤ect dominates, population growth declinesand human capital formation increases further

The subsistence consumption constraint (that adversely a¤ectresources devoted to children) has a lower e¤ect at high levelsof income

The demand for human capital is more signicant






The Malthusian Regime

The economy is a Malthusian steady-state equilibrium

Technological progresses is slow

The return to human capital is low =) parents have no incentiveto substitute child quality for quantity

The temporary increase in income increases population proportionally

Output per capita uctuates initially around a stationary level, andthen around an increasing, but minor trend.

The inherent Malthusian interaction between population and tech-nology gradually increases both population size and the rate of tech-nological progress






The Post-Malthusian Regime

The pace of technological progress increases due to the Malthu-sian interaction between population

Income per capita and population grow at an increasingly fasterpace

The demand for human capital gradually increases towards theend of the period






...The Post-Malthusian Regime

Technological progress and the rise in the demand for humancapital has two e¤ects on population growth:

Income E¤ect: More resources for raising childrenSubstitution E¤ect: Reallocation towards child quality

The income e¤ect dominates and both population quantity andquality increases

Output per capita increases along with an increase in the rateof population growth






Demographic Transition and Sustained Growth

Technological progress intensies further due to the gradualincrease in the level of human capital

The demand for human capital further increases

Parents are induced to further substitute child quality for quan-tity

The substitution e¤ect dominates and fertility rates decline per-manently, permitting the gain in productivity to be permanentlytransformed into gains in output per capita

The economy converges to a steady-state where output percapita may grow at a positive rate and population growth ismoderate






The Basic Structure of the Model

Overlapping-generations economy

t = 0; 1; 2; 3:::

One homogeneous good

2 factors of production:

Labor (measured in e¢ ciency units)Land






Production

The output produced in period t

Yt = Ht (AtX )1

Ht e¢ ciency units of laborX land

Output per worker produced at time t

yt = ht x(1)t y(ht ; xt)

ht Ht=Lt e¢ ciency units per-workerxt (AtX )=Lt e¤ective resources per worker






Factor Supply

Land is xed over time

E¢ ciency units of labor evolves endogenously

determined by householdsdecisions about the number andlevel of human capital of their children






Individuals

Live for 2 period

Childhood: (1st Period):

Consume a fraction of their parental unit-time endowment.The required time increases with childrens quality

Parenthood (2nd Period):

Allocate time between childrearing and workChoose the optimal mixture of quantity and quality of childrenSupply their remaining e¢ ciency units of laborEarn the competitive market wageConsume






Preferences

The utility function of individual t

ut = (ct)(1 )(ntht+1)

nt number of children of individual tht+1 level of human capital of each child






Budget Constraint

Second period budget constraint:

wthtnt( + et+1) + ct wtht

time required to raise a child, regardless of quality + et+1 time needed to raise a child with education et+1






Human Capital Formation

Human capital of children of generation t

ht+1 = h(et+1; gt+1)

gt+1 (At+1 At)=At rate of tech progress

et+1 education

heg (et+1; g t+1) > 0






Optimization: Income Expansion Path

Time Devoted toRaising Children

c~

γ

γ−1

SubsistenceConsumption

Income ExpansionPath

Consumption

Time Devoted toRaising Children

c~

γ

γ−1

SubsistenceConsumption

Income ExpansionPath

Consumption






...Optimal Investment in Child Quality

g t 1+

)g(ee 1t1t ++ =

1+te






Technological Progress

Technological progress over time

gt+1 At+1 At

At= g(et ; Lt)

g(0; Lt) > 0






Dynamics of Population and the Level of Resources per Worker

The evolution of population:

Lt+1 = ntLt

The evolution of e¤ective resources per capita:

xt+1 =At+1XLt+1

=(1+ gt+1)AtX

ntLt=1+ gt+1nt

xt






The Dynamical System

A sequence fxt ; et ; gt ; Ltg1t=0 such that:

8>>>>>>><>>>>>>>:

xt+1 = (et ; gt ; xt ; Lt)xt

et+1 = e(g(et ; Lt))

gt+1 = g(et ; Lt)

Lt+1 = n(et ; gt ; xt ; Lt)Lt






The Conditional Evolution of Technology and Education

A sequence fgt ; et ; Lg1t=0 such that:

8<:gt+1 = g(et ; L)

et+1 = e(gt+1)






The Evolution of Education and Technology

te

g t )( 11 ++ = tt gee

);( 11 Legg tt =+

te

g t )( 11 ++ = tt gee

)(Lg l 1







te

g t )( 11 ++ = tt gee

);( 21 Legg tt =+

)(Lg l 2







te

g t )( 11 ++ = tt gee

);( 31 Legg tt =+

)(Lg l 3







g t )g(ee 1t1t ++ =

);( 41 Legg tt =+

eu eh

gh

gu

)(Lg l 4

te







g t )g(ee 1t1t ++ =

);( 51 Legg tt =+

eh

gh

gu

te






The Evolution of Education and Resources Per Worker: Small Population

te

txtt xx =+1

)(Lx l

EE

)(Le

Conditional MalthusianFrontier






The Evolution of Education and Resources Per Worker: Intermediate Population

te

txtt xx =+1

)(Lx l

EE

EE EE

)(Leu )(Leh)(Le







The Evolution of Education and Resources Per Worker: Large Population

te

tx tt xx =+1 EE

)(Le )(Leh







Calibrations of Galor-Weil - (Lagerlof RED 2006)






...Calibrations of Galor-Weil - (Lagerlof RED 2006)






Implications

The transition from stagnation to growth is an inevitable by-product of the process of development

The inherent Malthusian interaction between technology andpopulation, accelerated the pace of technological progress, andeventually brought an industrial demand for human capital

Human capital formation, triggered a demographic transition,enabling economies to convert a larger share of the fruits offactor accumulation and technological progress into growth ofincome per capita

Variations in the timing of the take-o¤ from stagnation togrowth contributed signicantly to the Great Divergence






Implications for the Emergence of Convergence Clubs

Di¤erences in the timing of the take-o¤ from stagnation togrowth across countries contributed to the emergence of con-vergence clubs

Although the long-run equilibrium may not di¤er across economies,di¤erential timing of takeo¤s from stagnation to growth seg-mented economies into three fundamental regimes the di¤er intheir growth structure:

Slow growing economies in the vicinity of a Malthusian regime

Fast growing countries in a sustained growth regime

Economies in the transition from one regime to another






Complementary Theories

Reinforcing mechanisms for the rise in human capital formation

The rise in life expectancy (Galor-Moav, AER 1999)

The decline in the protability of child Labor (Hazan-Berdugo,EJ 2002 Doepke, JEG 2004)

Selection of preferences towards child quality (Galor-Moav, QJE2002)

Female-biased technical change (Galor-Weil, AER 1996)






Complementary Theories

Reinforcing mechanisms for the sources of technological progressand its acceleration

Transition from slow growing agricultural technology to rapidlyevolving industrial technology (Hansen-Prescott, AER 2002)

Darwinian selection of educated, entrepreneurial, individualstriggers technological progress (Galor-Moav, QJE 2002)






Implications for the Comparative Development

Variations in the economic performance across countries (e.g., earlierindustrialization in England than in China) reect:

Variations in initial conditions and historical accidents =)variations in:

Cultural and genetic diversity:Institutional, demographic, and cultural factorsTrade patterns, colonial status, and public policy






Initial Conditions and Technological Progress

Variations in technological advancement (given the composition ofthe population) reects variations in:

Cultural and genetic diversity (wider spectrum of traits is likely to

contain those more complementary to the adoption or implementation of

new technologies)

Institution (IPR), Cultural factors (entrepreneurship and science)

Trade and colonial status (technological di¤usion)

gt+1 = g(et ; L; )

= fIPR, genetic diversity, culture, trade, colonial history,...






Earlier Take-O¤ due to factors a¤ecting technological progress

te

g t

);,(1 Ω=+ Legg tt

te

g t);( 11 Ψ= ++ tt gee

)(Lg l Ω;

)(g Ψˆ






Earlier Take-O¤ due to factors a¤ecting technological progress

g t

);( 11 Ψ= ++ tt gee

);,(1 Ω=+ Legg tt

)(Ωg

te

)(g Ψˆ






Initial Conditions and Human Capital Formation

Once the demand for human capital emerged variations in humancapital formation was determined by variations in:

Inequality and Credit market imperfections

Concentration of land ownership =) The prevalence of publiceducation

Trade (Asymmetric e¤ects on the return to human capital in a skilledand unskilled-abundant economies)

et+1 = e(gt+1; )

= finequality, credit markets, public schooling, social structure,

trade..






Earlier Take-O¤ due to factors a¤ecting human capital formation

te

g t

);,(1 Ω=+ Legg tt

te

g t);( 11 Ψ= ++ tt gee

)(Lg l Ω;

)(g Ψˆ






Earlier Take-O¤ due to factors a¤ecting human capital formation

te

g t

);,(1 Ω=+ Legg tt

te

g t

);( 11 Ψ= ++ tt gee

)(Lg l Ω;

)g(Ψ





Measurement of Genetic DiversityHistorical AnalysisContemporary AnalysisThe Neolithic Revolution

Deep Rooted Factors in Comparative Development

The Out of Africa Hypothesis and Comparative Development

Migratory distance from the geographical origins of Homo sapi-ens a¤ects contemporary variations in economic developmentvia Genetic Diversity

The Neolithic Revolution (NR)

The time elapsed since the NR a¤ects contemporary variationsin life expectancy and income per capita






Measurement of Genetic Diversity

Population geneticists measure the diversity of genetic materialwithin a population (e.g., an ethnic group) using an index calledexpected heterozygosity

The index captures the probability that two individuals, selected atrandom, are genetically di¤erent from one another

Given allelic frequencies for a particular gene or DNA locus, onemay construct a gene-specic Herndahl index, which whenaveraged over multiple genes or DNA loci yields the overall expectedheterozygosity for the relevant population






The Data on Expected Heterozygosity

Expected heterozygosity calculated for the 53 HGDP ethnic groupsusing allelic frequencies for 783 microsattelite loci encompassing allautosomal (non-sex) chromosomes

Microsatellites are a class of genes inhabiting the non-protein-codingregions of the human genome, and are:

Selectively neutral ensures that the observed cross-sectional variation in

diversity is not due to di¤erential forces of natural selection

Mutationally active facilitates the construction of population trees

and thus the genealogical and migratory histories of populations

Heterozygosity in microsatellites is known to be correlated with thatin protein-coding regions of the genome






The Proposed Diversity Hypothesis

Genetic diversity within a society generates costs and benets:

Benets: wider spectrum of traits is likely to contain those morecomplementary to the adoption or implementation of newtechnologies =) GD enhances knowledge creation and fosterstechnological progress

Costs: wider spectrum of traits reduces the likelihood ofcooperative or trustful behavior =) GD generates ine¢ cienciesin the operation of the economy and in the transmission ofsociety-specic human capital

Diminishing marginal benets & Increasing marginal cost

=) A hump-shaped relationship across populationsbetween genetic diversity and development outcomes






The HGDP Ethnic Groups






Resolving Data Limitations using the Serial-Founder E¤ect

The out of Africahypothesis of human origins and theserial-founder e¤ect of demic di¤usion:

As subgroups left the initial colonies to create new coloniesfarther away, they carry with them only a subset of the geneticdiversity of their parental colonies

=) Lower genetic diversity exists in populations atgreater migratory distances from east Africa

=) Migratory distance from East Africa can be used toproject (i.e., impute) the genetic diversity of populationsfor which data is unavailable






An Illustration of the Serial-Founder E¤ect


















Migratory Distance from East Africa






Evidence of the Serial-Founder E¤ect






Resolving Data Limitations

Migratory distance from East Africa explains 86% of the variationacross ethnic groups in within-group genetic diversity

The strong predictive power of migratory distance from East Africafor genetic diversity permits the employment of migratory distanceto project (impute) the missing genetic diversity data






Tests

Stage I (historical analysis):

Restrict attention to the pre-colonial era

Stage II (contemporary analysis):

Account for between-group genetic di¤erences (genetic distance),using the ethnic compositions of each country today






Channels to be Examined






Summary of the Channels to be Examined
























Actual Diversity and Comparative Development in 1500

Actual Genetic Diversity and Economic Development in 1500 CE

(1) (2) (3) (4) (5)Dependent Variable is Log Population Density in 1500 CE

Genetic Diversity 413.51*** 225.44*** 203.82*(97.32) (73.78) (97.64)

Genetic Diversity Sqr. -302.65*** -161.16** -145.72*(73.34) (56.16) (80.41)

Log Transition Timing 2.40*** 1.21*** 1.14(0.27) (0.37) (0.66)

Log Arable % of Land 0.73** 0.52*** 0.55*(0.28) (0.17) (0.26)

Log Absolute Latitude 0.15 -0.16 -0.13(0.18) (0.13) (0.17)

Log Agri. Suitability 0.73* 0.57* 0.59(0.38) (0.29) (0.33)

Optimal Diversity 0.683*** 0.699*** 0.699***(0.008) (0.015) (0.055)

Continent Dummies No No No No YesObservations 21 21 21 21 21R-squared 0.42 0.54 0.57 0.89 0.90

Notes: Robust standard errors in parentheses; *** p<0.01, ** p<0.05, * p<0.1






Migratory Distance and Comparative Development in 1500Migratory Distance from East Africa and Economic Development in 1500 CE

(1) (2) (3) (4) (5) (6)OLS OLS OLS OLS 2SLS 2SLS

Dependent Variable is Log Population Density in 1500 CEGenetic Diversity 255.22** 196.04* 233.76*** 181.93**

(100.59) (92.03) (86.88) (71.93)Genetic Diversity Sqr. -209.81** -128.52 -167.56** -130.76**

(73.81) (79.08) (65.73) (59.27)Mig. Distance 0.51*** 0.07 0.29* 0.10

(0.15) (0.18) (0.15) (0.19)Mig. Distance Sqr. -0.02*** -0.01 -0.02** 0.00

(0.01) (0.01) (0.01) (0.01)Log Transition Timing 1.53*** 1.58* 1.18*** 1.17**

(0.35) (0.74) (0.34) (0.48)Log Arable % of Land 0.42** 0.47*** 0.53*** 0.55**

(0.18) (0.15) (0.17) (0.22)Log Absolute Latitude -0.31 -0.18 -0.17 -0.12

(0.18) (0.18) (0.11) (0.13)Log Agri. Suitability 0.59* 0.52 0.56** 0.60**

(0.30) (0.31) (0.26) (0.26)

Optimal Diversity 0.698*** 0.696***(0.015) (0.045)

Overid. p-value 0.89 0.86Continent Dummies No No No No No YesObservations 21 21 21 21 21 21R-squared 0.34 0.46 0.88 0.90 0.89 0.90







Predicted Diversity and Comparative Development in 1500

Predicted Genetic Diversity and Economic Development in 1500 CE

(1) (2) (3) (4) (5) (6)Dependent Variable is Log Population Density in 1500 CE

Pred. Diversity 250.99*** 213.54*** 203.02*** 195.42*** 199.73**(68.26) (63.50) (61.05) (56.09) (80.51)

Pred. Diversity Sqr. -177.40*** -152.11*** -141.98*** -137.98*** -146.17***(50.22) (46.65) (44.83) (40.84) (56.26)

Log Transition Timing 1.29*** 1.05*** 1.16*** 1.24***(0.18) (0.19) (0.15) (0.24)

Log Arable % of Land 0.52*** 0.40*** 0.39***(0.12) (0.09) (0.10)

Log Absolute Latitude -0.17* -0.34*** -0.42***(0.09) (0.09) (0.12)

Log Agri. Suitability 0.19 0.31*** 0.26***(0.12) (0.10) (0.10)

Optimal Diversity 0.707*** 0.702*** 0.715*** 0.708*** 0.683***(0.116) (0.035) (0.108) (0.073) (0.252)

Continent Dummies No No No No No YesObservations 145 145 145 145 145 145R-squared 0.22 0.26 0.38 0.50 0.67 0.69

Notes: Bootstrap standard errors in parentheses; *** p<0.01, ** p<0.05, * p<0.1






Predicted Diversity and Comparative Development in 1500






Diversity and Comparative Development in 1500 CE












Robustness Analysis






Robustness Analysis






Robustness Analysis






Robustness to Aerial Distance and Migratory Distances from PlaceboOrigins

Robustness to Alternative Measures of Distance

(1) (2) (3) (4) (5)Dependent Variable is Log Population Density in 1500 CE

Distance calculated from: Addis Ababa Addis Ababa London Tokyo Mexico CityMigratory Distance 0.138** -0.040 0.052 -0.063

(0.061) (0.063) (0.145) (0.099)Migratory Distance Sqr. -0.008*** -0.002 -0.006 0.005

(0.002) (0.002) (0.007) (0.004)Aerial Distance -0.008

(0.106)Aerial Distance Sqr. -0.005

(0.006)Log Transition Timing 1.160*** 1.158*** 1.003*** 1.047*** 1.619***

(0.144) (0.138) (0.164) (0.225) (0.277)Log Arable % of Land 0.401*** 0.488*** 0.357*** 0.532*** 0.493***

(0.091) (0.102) (0.092) (0.089) (0.094)Log Absolute Latitude -0.342*** -0.263*** -0.358*** -0.334*** -0.239***

(0.091) (0.097) (0.112) (0.099) (0.083)Log Agri. Suitability 0.305*** 0.254** 0.344*** 0.178** 0.261***

(0.091) (0.102) (0.092) (0.080) (0.092)

Observations 145 145 145 145 145R-squared 0.67 0.59 0.67 0.59 0.63







Robustness to Distance from Technological Frontiers

Regional Technological Frontiers

City and Modern Location Continent Sociopolitical Entity Relevant PeriodCairo, Egypt Africa Mamluk Sultanate 1500 CEFez, Morocco Africa Marinid Kingdom of Fez 1500 CELondon, UK Europe Tudor Dynasty 1500 CEParis, France Europe Valois-Orléans Dynasty 1500 CEConstantinople, Turkey Asia Ottoman Empire 1500 CEPeking, China Asia Ming Dynasty 1500 CETenochtitlan, Mexico Americas Aztec Civilization 1500 CECuzco, Peru Americas Inca Civilization 1500 CECairo, Egypt Africa Fatimid Caliphate 1000 CEKairwan, Tunisia Africa Berber Zirite Dynasty 1000 CEConstantinople, Turkey Europe Byzantine Empire 1000 CECordoba, Spain Europe Caliphate of Cordoba 1000 CEBaghdad, Iraq Asia Abbasid Caliphate 1000 CEKaifeng, China Asia Song Dynasty 1000 CETollan, Mexico Americas Classic Maya Civilization 1000 CEHuari, Peru Americas Huari Culture 1000 CEAlexandria, Egypt Africa Roman Empire 1 CECarthage, Tunisia Africa Roman Empire 1 CEAthens, Greece Europe Roman Empire 1 CERome, Italy Europe Roman Empire 1 CELuoyang, China Asia Han Dynasty 1 CESeleucia, Iraq Asia Seleucid Dynasty 1 CETeotihuacán, Mexico Americas Pre-classic Maya Civilization 1 CECahuachi, Peru Americas Nazca Culture 1 CE






Robustness to Distance from Technological Frontiers

Robustness to the Technology Di¤usion Hypothesis

(1) (2) (3) (4) (5) (6)Log Population Density Log Population Density Log Population Density

in 1500 CE in 1000 CE in 1 CEPred. Diversity 199.02*** 156.74** 182.90*** 183.77** 184.98*** 215.86**

(55.06) (77.98) (61.42) (91.20) (61.64) (106.50)Pred. Diversity Sqr. -140.12*** -114.63** -129.82*** -134.61** -132.73*** -157.72**

(40.10) (54.67) (44.82) (63.65) (45.10) (74.82)Log Transition Timing Yes Yes Yes Yes Yes YesLand Prod. Controls Yes Yes Yes Yes Yes YesLog Dist. to Regional -0.19*** -0.19***Frontier in 1500 CE (0.06) (0.07)

Log Dist. to Regional -0.23** -0.23**Frontier in 1000 CE (0.10) (0.11)

Log Dist. to Regional -0.32*** -0.30***Frontier in 1 CE (0.09) (0.10)

Optimal Diversity 0.710*** 0.684*** 0.704*** 0.683*** 0.697*** 0.684**(0.100) (0.172) (0.040) (0.172) (0.069) (0.313)

Continent Dummies No Yes No Yes No YesObservations 145 145 140 140 126 126R-squared 0.70 0.72 0.63 0.64 0.65 0.66








The Contemporary E¤ects of Unadjusted versus Adjusted Genetic Diversity

(1) (2) (3) (4)Dependent Variable is Log Income Per Capita in 2000 CE

Unadjusted Diversity 136.23*** -12.88 -73.82(52.67) (63.03) (76.41)

Unadjusted Diversity Sqr. -104.06*** 7.03 57.95(38.98) (47.83) (60.89)

Adjusted Diversity 560.82*** 561.67*** 439.94**(137.02) (157.53) (202.67)

Adjusted Diversity Sqr. -400.02*** -397.33*** -311.86**(95.77) (111.60) (146.01)

Continent Dummies No No No YesObservations 153 153 153 153R-squared 0.08 0.13 0.14 0.43Notes: Bootstrap standard errors in parentheses; *** p<0.01, ** p<0.05, * p<0.1







Adjusted Genetic Diversity and Economic Development in 2000 CE

(1) (2) (3) (4) (5) (6)Dependent Variable is Log Income Per Capita in 2000 CE

Adj. Diversity 251.79*** 281.57*** 228.52** 247.27** 255.56** 283.76***(84.28) (99.18) (93.46) (99.20) (99.63) (96.28)

Adj. Diversity Sqr. -173.43*** -195.60*** -159.43** -170.07** -177.22** -196.98***(59.72) (70.20) (66.63) (69.67) (70.49) (68.38)

Log Transition Timing 0.23 0.22 0.23 0.23 0.22(0.26) (0.28) (0.22) (0.25) (0.29)

Log Absolute Latitude 0.14 0.10 0.04 0.13 0.14(0.13) (0.13) (0.12) (0.12) (0.14)

Log Arable % of Land -0.31*** -0.32*** -0.33*** -0.29*** -0.31***(0.07) (0.07) (0.08) (0.07) (0.09)

Ethnic Frac. -1.19***(0.39)

Civil Conicts Per Year -0.221960 - 2000 CE (0.19)

Log Population Density 0.01in 1500 CE (0.10)

Optimal Diversity 0.726*** 0.720*** 0.717*** 0.727** 0.721*** 0.720***(0.088) (0.024) (0.138) (0.321) (0.122) (0.038)

Continent Dummies Yes Yes Yes Yes Yes YesWestern O¤shoots Yes Yes No Yes Yes YesObservations 140 140 136 140 140 140R-squared 0.48 0.56 0.56 0.60 0.57 0.56

























Discussion of Results

Controlling for land productivity, transition timing, and continentalxed e¤ects:

Optimal GD = 0.7198 GD in US

Increasing the diversity of the most homogenous country(Bolivia) to that of the US =) raise income per capita by afactor of 4.7 (increasing income in Bolivia from 9% to 40% ofthat of the US)

Decreasing the diversity of the most heterogenous country(Ethiopia) to that of the US =) raise income per capita by afactor of 1.8 (increasing income in Ethiopia from 2% to 4% ofthat of the US)






Diversity and Comparative Development in 2000 CERobustness to Institutional Determinants of Development in 2000 CE (Panel A)


Panel A: Baseline Specication with InstitutionsAdj. Diversity 197.21** 218.55** 214.40** 224.31** 244.14*** 254.31***

(91.71) (100.80) (94.60) (93.40) (91.79) (91.13)Adj. Diversity Sqr. -137.39** -151.97** -148.74** -155.48** -169.97*** -176.92***

(64.73) (71.37) (67.46) (66.63) (65.17) (64.72)Log Transition Timing 0.462* 0.420 0.324 0.298 0.563* 0.566*

(0.253) (0.268) (0.280) (0.276) (0.304) (0.302)Log Absolute Latitude 0.136 0.142 0.184 0.192* 0.230* 0.243**

(0.117) (0.123) (0.116) (0.116) (0.120) (0.121)Log Arable % of Land -0.324*** -0.318*** -0.298*** -0.292*** -0.305*** -0.302***

(0.070) (0.077) (0.071) (0.072) (0.073) (0.073)Democracy Index 0.119*** 0.059** 0.051*1960 - 2000 CE (0.023) (0.029) (0.028)

Executive Constraints 0.163*** 0.075 0.0601960 - 2000 CE (0.047) (0.053) (0.051)

Optimal Diversity 0.718*** 0.719*** 0.721*** 0.721*** 0.718*** 0.719***(0.033) (0.047) (0.167) (0.159) (0.104) (0.095)

R-squared 0.63 0.60 0.68 0.67 0.69 0.68Legal Origin Dummies No No Yes Yes Yes YesMajor Religion Shares No No No No Yes YesContinent Dummies Yes Yes Yes Yes Yes YesObservations 140 140 140 140 140 140








Robustness to Institutional Determinants of Development in 2000 CE (Panels B and C)


Panel B: Transition Timing, Geography, and InstitutionsLog Transition Timing 0.484** 0.457* 0.384* 0.364* 0.578** 0.587**

(0.238) (0.236) (0.214) (0.215) (0.266) (0.260)Log Absolute Latitude 0.173 0.186 0.230* 0.243* 0.266** 0.284**

(0.115) (0.126) (0.133) (0.133) (0.128) (0.127)Log Arable % of Land -0.317*** -0.310*** -0.293*** -0.285*** -0.295*** -0.289***

(0.076) (0.073) (0.065) (0.066) (0.073) (0.073)Democracy Index 0.129*** 0.071** 0.065**1960 - 2000 CE (0.021) (0.028) (0.026)

Executive Constraints 0.183*** 0.092* 0.080*1960 - 2000 CE (0.047) (0.052) (0.048)

R-squared 0.62 0.59 0.66 0.66 0.67 0.66

Panel C: Institutions OnlyDemocracy Index 0.113*** 0.060* 0.072**1960 - 2000 CE (0.024) (0.033) (0.031)

Executive Constraints 0.155*** 0.079 0.097*1960 - 2000 CE (0.056) (0.059) (0.057)

R-squared 0.52 0.49 0.58 0.57 0.60 0.59Legal Origin Dummies No No Yes Yes Yes YesMajor Religion Shares No No No No Yes YesContinent Dummies Yes Yes Yes Yes Yes YesObservations 140 140 140 140 140 140

Notes: Bootstrap standard errors in parentheses; *** p<0.01, ** p<0.05, * p<0.1Oded Galor Unied Growth Theory and Comparative Economic Development Kuznets Lecture, Yale University





Migratory Distance and Comparative Development in 2000 CE






Migratory Distance and Comparative Development in 1500 CE






The Neolithic Revolution: Main Hypothesis

The Neolithic Revolution (NR) increased humansexposure andvulnerability to infectious diseases due to: the rise in populationdensity, the domestication of animals, and the increase in work e¤ort

The NR generated an evolutionary advantage for individuals whowere pre-disposed towards a more e¤ective immune system

The time elapsed since the ancestral population of a given countryexperienced the NR has a¤ected the extent of these evolutionaryprocesses, =) signicant variations in mortality from infectiousdiseases and life expectancy across countries and ethnic groups






Regional Variations in the Timing of the Neolithic and Life Expectancy

Region Time since NR Time since NR Life Expectancy(Individual) (regional) 2000

Asia 7200 6950 69Europe 6400 6300 75S. America 5860 3800 71N. America 5100 2300 72Oceania 5000 2175 69Africa 3200 2900 51






Determinants of Life Expectancy

(1) (2) (3) (4) (5) (6)OLS OLS OLS OLS OLS IV

Dependent Variable: Life Expectancy in 2000Years since Neolithic 4.177*** 2.340*** 2.020*** 1.705*** 1.726*** 2.439***(ancestors) (0.371) (0.475) (0.473) (0.373) (0.509) (0.704)Absolute Latitude 0.164*** 0.141** -0.036 -0.028 -0.052

(0.059) (0.062) (0.052) (0.072) (0.057)% Arable Land -0.070 -0.021 -0.028 -0.043 0.035

(0.043) (0.041) (0.040) (0.067) (0.041)Social infrastructure 15.56*** 1.737 7.448 6.022

(3.007) (3.968) (4.266) (3.610)Ln GDP/pc 2000 4.166*** 3.250***

(1.019) (1.040)Education 2000 0.056 0.368

(0.401) (0.407)Ln GDP/pc 1960 3.193***

(1.145)Education 1960 0.145

(0.551)

Continental Dummies No Yes Yes Yes Yes YesObservations 148 148 113 113 70 80R2 0.500 0.742 0.814 0.864 0.868 0.875

Robust standard errors in parentheses; *** p<0.01, ** p<0.05, * p<0.1






Years since the Neolithic Revolution and Life Expectancy

JPNKORFIN IDN

BGD

HTI

PHL

BWA

JAM

ZWE

MOZIRL

SWZ

DNK

LKA

LSO

NOR

MWI

BELGBRTHA

RWA

SWE

ZAF

PNG

POL

GTMNLD

ZMB

VENMYSCOL

BRA

CHE

TGO

BOL

GMB

MEX

SEN

DOM

PRY

BEN

CMR

SLVPERCOG

MLINZL

PRTAUT

PANECU

CHL

DZA

HND

TUN

SLEGUYUGATTONER

NIC

FRAURY

CAF

ESP

HUN

ZAR

ARG

GHA

KENISR

AUS

USA

MLT

IND

ITA

SGPPAK

CAN

DEU

TUR

SDNBGRCHN

IRN

CRI

GRC CYPSYR

EGY

JOR

MUS

20

10

0

10

20

Life

Exp

ecta

ncy

in 2

000

4 2 0 2 4Years elapsed since the ancestors of the population expereinced the Neolithic Revolution

coef = 1.7050471, se = .37394582, t = 4.56






Years of Life Lost to Infectious Diseases, 2002

(1) (2) (3)

Death in 2002 due to:

Infectious Diseases Cancer CardiovascularYears since Neolithic -3.90*** -1.97 16.52***

(weighted) (1.09) (2.42) (5.42)

Absolute Latitude 0.16 0.18 0.91(0.15) (0.38) (0.92)

% Arable Land 0.07 0.35 -0.16

(0.09) (0.22) (0.43)

Social infrastructure 7.32 38.00 -161.77(7.63) (30.63) (61.21)***

Ln GDP/pc 2002 -7..10 -11.51 -16.37(5.11) (8.39) (23.82)

Education 2000 -2.39 2.63 5.14(0.83)*** (1.95) (7.04)

Continental Dummies Yes Yes YesObservations 86 86 86R2 0.884 0.26 0.76Robust standard errors in parentheses; *** p<0.01, ** p<0.05, * p<0.1





International TradeConcentration of Land OwnershipConcluding RemarksReferences

Hurdles for human capital formation

International Trade:

Asymmetric e¤ects on the demand for human capital, the com-position of population and the pace of the transition from stag-nation to growth

Concentration of land ownership

Delays in the implementation of human capital promoting insti-tutions and economic development






International Trade and the Pace of the Transition from Stagnation to Growth

International trade in the early stages of industrialization had anasymmetric e¤ect on:

the demand for human capital in industrial and non-industrialeconomies

timing of the demographic transition in industrial andnon-industrial economies

the pace of the transition from Malthusian stagnation tosustained economic growth






The Main Hypothesis

International trade had an asymmetric e¤ect on DCs and LDCS:

Specialization in production:

DCs - skilled intensive goodsLDCs - unskilled intensive goods

Demand for human capital

A rise in DCsA decline in LDCs

Demographic Transition

Acceleration in DCsDelay in LDCS






...The Main Hypothesis

Gains from Trade

DCs - channeled towards income per capitaLDCs - channeled towards population growth

) sustained di¤erences in income per capitaacross countries






The Di¤erential E¤ect of Trade on Fertility

(1) (2) (3) (4)

OLS IV OLS IVTotal Fertility Rate (1985-1990)

Non-OECD OECD

ln(Trade/GDP) 1985 0.33** 0.70*** -0.04 -0.13**(0.14) (0.19) (0.09) (0.06)

ln(GDP/pc) 1985 -0.39 -0.44 0.14 0.10(0.27) (0.25) (0.23) (0.23)

Average Infant Mortality 0.03*** 0.03*** 0.03*** 0.03***1985-90 (0.005) (0.005) (0.005) (0.006)

Number of countries 108 108 24 24R2 0.72 0.71 0.62 0.60Robust standard errors in parentheses; *** p<0.01, ** p<0.05






The E¤ect of Trade on Total Fertility Rate - Non-OECD

AGOARG BHS

BHR

BGDBRB

BLZ

BEN

BTNBOL

BWA

BRA BGR

BFA BDICMR

CPV

CAFTCDCHL

CHN

COL

COM

COG

CRI

CIV

CYP

CZE

COD DJI

DOMEGY SLVETH FJI GMB

GHAGTM

GINGNB

GUY

HTI

HND

HKGHUNIND

ISR

JAM

JOR

KEN

LAOLSO

LBRMDGMWI

MYS

MLI

MLTMRT

MUS

MEXMNG

MARMOZ

MMR

NAM

NPL

NIC

NER

OMN

PAK

PANPNG

PRY

PER

PHL

POLPRI

KOR ROMRUS

RWA

LCA

VCT

WSMSEN

SLE

SGP

SLB

SOMZAF

LKA

SDN

SUR

SWZ

SYR

THA

TGO

TON

TTOTUN

UGA

TZA

URY

VUT

YEM

ZMB

ZWE

42

02

45

Tota

l Fer

tility

Rat

e 19

859

0

1.5 1 .5 0 .5 1 1.5Log Trade Share in GDP 1985






The Transition from Stagnation to Growth

AUS

AUT

BEL

CAN

DNK

FIN

FRA

DEU

GRC

ISL

IRL

ITA

JPN

LUX

NLD

NZL

NOR

PRTESP

SWE

CHE

TURGBR

USA

.8.4

0.4

.8To

tal F

ertil

ity R

ate

1985

90

1 .5 0 .5 1 1.5 2Log Trade Share in GDP 1985






The E¤ect of Trade on Education - Non-OECD

ARG

BHR

BGDBRB

BEN

BOL

BWA

BRA CMR

CAF

CHL

CHN

COL COGCRI

CYP

COD DOM

EGY SLV

FJI

GMB

GHAGTM GNBGUYHTIHND

HKG

HUN

IND

ISR

JAM

JOR

KEN

LSOLBRMWI

MYS

MLIMUS

MEX

MOZMMRNPL

NICNER

PAK

PAN

PNG

PRY

PER

PHLPOL

KOR

RWA

SEN

SLE

SGP

ZAFLKA

SDN

SWZ

SYRTHA TGO

TTO

TUN

UGA

TZAURY

YEM

ZMB

ZWE1

.51

.50

.51

1.5

Edu

catio

n Fl

ow 1

985

1990

1.5 1 .50 .5 1 1.5Log Trade Share in GDP 1985






The E¤ect of Trade on Education - OECD

AUSAUT BELCAN

DNK

FIN

FRADEU

GRCISL

IRL

ITAJPN NLD

NZL

NOR

PRT

ESP

SWE CHETURGBRUSA

2.5

21

.51

.50

.51

1.5

22.

5E

duca

tion

Flow

198

519

90

1.25 1 .5 0 .5 .75Log Trade Share in GDP 1985






Concentration of Land Ownership and the Transition from Stagnation to Growth

In the 2nd phase of industrialization the demand for humancapital increased as a by-product of the acceleration intechnological progress and generated a growth promoting rolefor:

Human capital formationHuman capital promoting institutions

Investment in human capital was sub-optimal






Concentration of Land Ownership and the Pace of the Transition from Stagnationto Growth

Lower complementarity between human capital and land vs.physical capital generated a conicts between landowners andcapitalists about the level of investment in public schooling

Unequal distribution of land was a hurdle for human capitalaccumulation and economic growth:

Delayed education reformsReduced the skill-intensity of the emerging industrial sectorAdversely a¤ected the growth path in the industrial stage






Concentration of Land Ownership and Education Expenditure: US 1900-1940

(1) (2)OLS IV

Change in log educationalexpenditure per child

change in land concentration -2.34*** -3.23***(0.80) (0.91)

change in income per capita 0.72*** 0.72***(0.17) (0.17)

change in % of the black pop. -2.90*** -2.58***(0.96) (0.92)

change in % of the urban pop. -0.66 -0.51(0.40) (0.37)

National time xed e¤ects Yes YesR2 0.48Observations 79 79First stage F-statistic 13.49First stage p-value <0.001Robust s.e. in parentheses; *** p<0.01, ** p<0.05






Concluding Remarks

Unied growth theory provides a meta-theory that naturallyencompasses existing hypothesis about the role of geography,institutions, and the composition of human traits, in comparativedevelopment

UGT suggests that contemporary development is based on thefactors that a¤ected the pace of the transition from stagnation togrowth

Variations the economic performance across countries and regionsare linked to variations in deep rooted factors and theirmanifestation in di¤erences in genetic and cultural diversity,scientic development, and educational, institutional, geographicalfactors






References

Underlying Philosophy:

"Towards a Unied Theory of Economic Growth: Oded Galor on theTransition from Malthusian Stagnation to Modern EconomicGrowth," World Economics, June 2008 (An interview by BrianSnowdon)






References

Foundations:

Galor Oded, "From Stagnation to Growth: Unied Growth Theory,"Handbook of Economic Growth, 2005, 171-293

Galor Oded and David N. Weil, "From Malthusian Stagnation toModern Growth," American Economic Review, 89, 150-154, (May1999)

Galor Oded and David N. Weil, "Population, Technology andGrowth: From Malthusian Stagnation to the DemographicTransition and Beyond," American Economic Review, 90, 806-828,(September 2000)






References

Implications for Comparative Development

Galor Oded and Andrew Mountford, Trading Population forProductivity: Theory and Evidence, Review of Economic Studies,75, 1143-1179 (November 2008).

Galor Oded, Omer Moav and Dietrich Vollrath, "Inequality in LandOwnership, the Emergence of Human Capital PromotingInstitutions, and the Great Divergence," Review of EconomicStudies, 76, 143-179 (January 2009).

Ashraf Quamrul and Oded Galor, Cultural Assimilation, CulturalDi¤usion and the Origin of the Wealth of Nations, 2007.

Ashraf Quamrul and Oded Galor, The Out of Africa Hypothesis,Human Genetic Diversity and Comparative EconomicDevelopment,2008






References

Additional Readings:

Ashraf Quamrul and Oded Galor, Dynamics and Stagnation in theMalthusian Epoch2009

Galor Oded and Omer Moav, The Neolithic Origins ofContemporary Variation in Life Expectancy, 2008

Galor Oded and Omer Moav, "Natural Selection and the Origin ofEconomic Growth," Quarterly Journal of Economics, 117,1133-1192 (November 2002)


Unified Growth Theory and Comparative Economic Development

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