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Q: economics: history & growth theory ( Answered ,   1 Comment )
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 Subject: economics: history & growth theory Category: Science > Social Sciences Asked by: gregnelson-ga List Price: \$20.00 Posted: 20 Apr 2002 11:07 PDT Expires: 20 May 2002 11:07 PDT Question ID: 2331
 ```Define the "era of civilization" to be the last twelve millenia. Proposition 0: the era of civilization has been an era of economic growth. I think this will be accepted: World GDP in 10,000BC cannot have been as much as ten times SubSaharan African GDP today, which is less than world GDP today. Proposition 1: the era of civilization has been an era of accelerating economic growth. I have not heard this proposition expressed explicitly, but suspect it is true. Towards the end of the era, world GDP has increased several percent per year for several centuries. Surely growth was slower at the beginning and middle of the era. Question: Is proposition 1 correct, and if so, why has growth accelerated? An answer with citations to sources would be appreciated.```
 ```The key problem is evaluating your proposition is to find suitable data to test it against. Fortunately, J. Bradford DeLong of the Department of Economics, U.C. Berkeley has done some good homework for us to provide estimates of the data we need to test you proposition. You will want to read his paper, “Estimating World GDP, One Million B.C. – Present” which can be found at: http://www.j-bradford- delong.net/TCEH/1998_Draft/World_GDP/Estimating_World_GDP.html Of particular interest are his estimates of World GDP from for the last 12 millennia. Three estimates which show similar trends are shown in a table and graph near the end of his article. His plot is log-log, and the trends can be described as piecewise linear with changes in slope approximately 9000, 3000, 150, and 60 years before present. A straight line on a log-log plot represents a power relationship (in this case, GDP is proportional to time to some power), where the power is the slope of the line on the log-log plot. For growth to be accelerating, the power must be greater than one. Before 9000 BP, the power is about .5; then it decreases to about 3, slowed to about 1.3, increased again to about 2.5, and appears to have slowed to below 1 in the last 20 years or so. Thus, if DeLong’s estimates are to be believed, growth was indeed slow in the first 3000 years or so of your “era of civilization” but has been generally accelerating with occasional blips since then. As to why the growth patterns have been as they are, it appears that the driving factor has actually been the patterns of growth in world population. The GDP per capita has also increased, but generally more slowly than population. The leveling off in the last 20 years also appears to be a direct consequence of a slowing of population growth. You may also wish to consult the book “The World Economy: a Millennial Perspective” by Angus Maddison, which provides similar population and GDP data for the last 2000 years. Information should be available at theworldeconomy.org http://www.theworldeconomy.org/about.htm although, when I checked, I was only able to viewed the Google cached pages of the site. A Google search on World GDP Is sufficient to turn up these and other useful references.``` Clarification of Answer by drdavid-ga on 22 Apr 2002 14:57 PDT ```I should have separated the answer to the second half of your question into a separate paragraph, but I think the answer is there (unless I misunderstood something): The World GDP trends (whether accelerating or not) are dominated by population growth. While per-capita GDP has also changed substantially over time, population growth has been so much faster that the per-capita changes have only a minor influence on the World GDP trends. Graphs for population, World GDP and per-capita GDP are all provided in the DeLong paper.```
 gregnelson-ga rated this answer: `Excellent answer to half my question.`
 ```I would like to add this question as a Comment because I am still waiting to get signed up as a Researcher. But I hope you can credit my response as a paid Answer in the near future. I will reply once I'm approved as a researcher with an "Answer" (identical to this comment) that you can give credit to. Proposition 1 is True for the following simple economic reasons: 1) Increasing and Compounded Expansion of the Working Population 2) Technological Growth 3) Trading Economically, you can reference the Cobb-Douglas production function (which you can find in any decent Microeconomics text) which tells us that: Production = f(L, K) Meaning: production is a function of Labor and Capital, both of which are enhanced by Technology. Now to my answers: 1) Compound and Increasing Population Growth - If technology and productivity are constant, you will always produce more as you have more people. The world's population has increased over time because mortality rates have declined. Even in the middle ages, people still lived to work longer and produce more things than they did in 10,000BC. This translates into both more absolute wealth and more per-capita wealth. This growth rate has also increased like compound interest. Consider the Adam & Eve scenario where two people produce two children. Their children produce two children, whose children produce two children in turn. As mortality rates also decline, population grows at an increasing rate. In historical reality, the effect is much stronger. In the Middle Ages, a family might produce 10 children of whom just 3 will live on average. Prior to the advent of birth control, population shot up as the average family began to produce 10 children and have 6 who live. The labor force has also expanded in other ways. Economic growth has skyrocketed in the last two centuries due to technology and the the incorporation of new groups into the labor force: women, blacks, 2) Technology: Technology enhances the productivity of Labor and Capital. Examples include Labor: paper, writing utensils, books, printing press, typewriter, word processor, personal computer printers. For Capital: interchangable parts, new processes, sea shipping (cheaper inputs), railroads, just-in-time inventory, efficient and liquid modern financial markets, etc. Education is also a critical technology. Exploration, the discovery of Chinese knowledge, importation of Arabic knowledge into Europe, etc. are all examples of education and cultural interchange. Clearly today we have mass communication, the Internet, etc. These make people more productive -- no need to always "reinvent the wheel" As a simple example, consider the additional economic production which has been created by you asking this question on Google. It might cost you \$20 to find an answer to this question but perhaps it would have taken you 3 hours to find it on your own. So you elect to pay me and you save 2 hours which you can put towards other productive purposes (and earn \$40). But never could have if it wasn't for the Google Answers technology. 3) Trading: Adam Smith and the classical economists rightly saw trading as the basis of the wealth of nations. You should be able to cite Smith and other's discusssions of trading goods and services, utilities and preferences. This leads to an increasing rate of economic growth as markets become more efficient. Less time is wasted as you can travel by railroad, raise financing for a great business idea on the capital markets, find skilled employees by calling up an executive recruiter, etc. Ideas of these sorts of innovations can be found for most times: the impact of the horse in the Americas, the importance of the llama in Incan Peru, etc. ========== Let me know if you have any questions. My background is that I have studied these issues of history and economics at Cornell University.```