Acemoglu and Robinson conclude that inclusive institutions , particularly political institutions, are necessary, although clearly not sufficient, to achieve economic success. Inclusive institutions are, according to Acemoglu and Robinson, the links in the cause-effect chains between innovation, economic growth and socially optimal wealth distribution.
Such a direction of causality is indeed often observed. However, there is also sometimes a reverse relationship in action. This reversed causality was in fact present in the former USSR, as well as in Central and Eastern Europe, for several decades before Despite central planning, predominant state ownership of enterprises and authoritative one-party political systems, it was possible to achieve marked technological progress, rapid development of education and a high degree of urbanization.
Accumulation of these changes sparked, in turn, a strong social demand for political change, which led to fundamental shifts in economic and political institutions and policies. Acemoglu and Robinson focus on rather extreme cases of extractive institutions in which there is limited interest on the part of the state, and underpinning elites, to develop innovation and investment incentives in the private economy.
However, if there is the will, such capacities can be slowly developed.
The World Economy: A Global Analysis - Horst Siebert - Google Livres
The point Acemoglu and Robinson are making is that there have often been situations in which there is no such will because interest groups can create institutions and methods of governments that allow them to meet their wealth requirements through extraction. In those cases, there would be little incentive for such groups to develop economic institutions and policies that produce widespread benefits at a high rate. The statistical evidence on economic growth can be interpreted to support the view that since the start of industrial revolution in Europe by the end of the 18th century there were no such strong incentives present in most African countries until recently, and in most Asian countries until the middle of the 20th century.
One of the first attempts to model economic growth based on a division into the conventional and innovative sectors was that of Phelps This theory, as well as the present day endogenous growth models, assumes that institutions are those of a competitive market economy. Moreover, the original Phelps model applied only to the TFA. In my adaptation of this model T is a measure of quality, denoted earlier in this paper by Q, of the fixed capital K and work-force N in the conventional sector, and of the fixed capital M and work-force R more precisely, of the innovative capital V in the sector producing qualitative changes.
Therefore, R denotes not only the number of researchers, as in the original model, but also teachers. The total workforce L grows at a constant rate. Phelps only considered balanced growth paths and set out to answer two questions:. What should be the optimal division of capital and labour between the two sectors, conventional and innovative? The answer to both these questions provided by Phelps applies only to a situation of balanced growth.
However, during the last two centuries, as we know from empirical data,. Since their initial levels differ considerably from the optimal ones, their approach to the optimal state extends over a fairly long period. During that period, we have an exceptional situation, one of technological revolution. The data show that for the current TFA about two centuries were needed to reach the optimal levels.
However, globally inequalities 6 still apply, so we continue to be in the period of slow convergence to the optimal state. This extended model explains the exceptionally high growth rate of per capita GDP within the TFA over the past years by three circumstances: the initially large growth reserve in the form of the low use of the stock of potential innovative talent of the population; the public policies and market institutions that have been developed to make gradually effective use of that reserve; and the high rate of population growth.
All these factors are, however, transitory since after a certain time, probably during the present century, we shall reach a situation of total use of the world talent pool, which must mean a fall in the growth rate of R to the level n. One must also expect stabilization of the world population at some stage, possibly sometime this century, which means n will fall to zero.
In general, this should mean, and certainly this is so for the extended Phelps model, a slow and prolonged decrease in the growth rate of qualitative changes in the TFA, the rate in that model decreasing asymptotically to zero. Thus, according to this theory, the period of some — years of an unusually fast growth will be something in the nature of a huge fluctuation in the history of civilization. The growth rate of per capita GDP would return with time to the very low level before the technological revolution.
As observed by all the authors of the stylized facts listed above, in non-TFA countries we have a strong variation of the per capita GDP growth rate, both over time and between countries. In these countries, much depends on a potentially very large number of factors, which have an influence on the transfer and absorption of technology from outside. Two factors are of fundamental importance. One of them is the technological gap, or more generally the qualitative gap, since the greater this gap the greater the growth reserve and the greater the number of innovations ready for possible use.
Another factor is the absorption capacity itself. When the development gap is large, the absorption capacities are typically undeveloped. On the other hand, when the development gap is already small, these capacities are typically large but the number of innovations that can be made available by transfer is also smaller than before.
Thus, even without theoretical inspiration, one may expect that countries will develop most rapidly at the intermediate stage between the very undeveloped and developed stages. Such a dependence is specific to each country. The empirical data confirm that the variation of the growth rate of GDP per working hour for countries with a similar level of development may be great. The importance of international diffusion for the development was noted first by economic historians e.
Recently, ten economists attempted to answer the question asked in the title of this paper: will the main trends of the 20th century continue in the 21st century? Their analysis was published in a book edited by Ignacio Palacios-Huerta Possibly the most extensive answer was proposed by the Massachusetts Institute of Technology economist Daron Acemoglu.
He organized his analysis around ten social, economic, technological and political trends of the 20th century. These are numbered 1 , 2 , and 3 below. Moreover, I shall somewhat redefine them, and complement with two more trends of my own. The aim is to assess whether all of them, or which of them, will continue into the 21st century. GDP growth per capita in the most technologically advanced economies was highly volatile in the 20th century, but the fluctuations took place around an extraordinarily stable growth trend. This trend was common for all economies from this group, hence it was almost unrelated to economic policies conducted by the countries concerned.
In less technologically advanced economies, GDP growth per capita was not only strongly diversified between countries, but also, in many cases, unstable over time; thus, it was strongly dependent on economic policies. The most technologically advanced countries accounted for almost the total global output of significant innovations. The 20th century saw a strongly rising dualism of the global economy, i. This trend was a continuation of a similar phenomenon witnessed in the 19th century.
The five trends of the 20th century listed above are also largely applicable to the 19th century, so they are essentially valid for the last years. Earlier, in the Middle Ages and the protocapitalistic epoch, the sector producing qualitative changes was both very small and expanding very slowly, which translated into a very low pace of economic growth per capita. The variation between countries in labour productivity was also low. The five trends represent the capitalist epoch. The key characteristic of this epoch is an exceptionally fast growth of the sector producing qualitative changes, in terms of inputs several times faster than the growth of the sector producing conventional goods and services.
The economic growth has thus been highly unbalanced in this epoch. In the TFA, the innovative talent pool, initially almost wasted, started to be employed more and more over time. Today that talent pool may be fully employed in the technologically most advanced countries. If the farmers owe very listed in the accession we see their action and capita, or one of the socio-economic children or a state, father with them to revert their server held.
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