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Introduction to Modern Economic Growth
on the broad outlines of a number of alternative fundamental causes of economic
growth and had at first look at the long-run empirical evidence relevance to these
hypotheses. We argued that approaches emphasizing institutional differences (and
differences in policies, laws and regulations) across societies are most promising for
understanding both the current growth experiences of countries and the historical
process of economic growth. We have also emphasized the importance of studying
the political economy of institutions, as a way of understanding why institutions
differ across societies and lead to divergent economic paths.
4.9. References and Literature
The early part of this chapter builds on Acemoglu, Johnson and Robinson (2006),
who discuss the distinction between proximate and fundamental causes and the various different approaches to the fundamental causes of economic growth. North and
Thomas (1973) appear to be the first to implicitly criticize growth theory for focusing on proximate causes alone and ignoring fundamental cause of economic growth.
Diamond (1997) also draws a distinction between proximate and fundamental explanations.
The importance of population in generating economies of scale was first articulated by Julian Simon (1990). The model presented in Section 4.2 draws on Simon’s
work and work by Michael Kremer (1993). Kremer (1993) argues for the importance
of economies of scale and increasing returns to population based on the acceleration
in the growth rate of world population. Another important argument relating population to technological change is proposed by Esther Boserup (1965) and is based on
the idea that increases in population creates scarcity, inducing societies to increase
their productivity. Other models that build economies of scale to population and
discuss the transition of the world economy from little or no growth to one of rapid
economic growth include Hanson and Prescott (2001), Galor and Weil (2001), Galor
and Moav (2002) and Jones (2004). Some of these papers also try to reconcile the
role of population in generating technological progress with the later demographic
transition. Galor (2006) provides an excellent summary of this literature and an
extensive discussion. McEvedy and Jones (1978) provide a concise history of world
population and relatively reliable information going back to 10,000 B.C. Their data
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