Improvements in technology had a different effect in the Malthusian pre-growth economy. They raised living standards only temporarily and instead raised the size of the population permanently. Technological improvements lead to larger, but not richer populations.
If this analysis of the pre-growth economy is true than we would expect to see a positive correlation between productivity and the density of the population. Ashraf and Galor 3 studied the Malthusian economy theoretically and empirically in a paper published in the American Economic Review.
The chart below is taken from their publication and confirms the theoretical prediction for the pre-growth economies in the year All the data is reported in the current borders of the world. On the x-axis of both charts you find the same metric: The productivity of the agricultural land as measured by the quality of the soil and the climate. On the chart on the left we see that those world regions with a low productivity of agriculture had very low population density. The regions with the highest population density on the other hand are all regions with very productive land.
The agricultural sector in Spain, India, or Morocco was much more productive than in Finland, Egypt, and Norway, but the people were not better off. The more productive regions were the more populous regions and the people there had to share with so many so that everyone remained at dismal levels of prosperity. In the long history before modern economic growth, higher productivity lead to larger, but not richer populations. Throughout history there were several episodes in which certain economies achieved economic growth, but in contrast to the sustained growth since the Industrial Revolution these episodes were all short-lived.
What is new about modern times is that the growth of incomes lasted for a very long time — until today — and that this growth did not only increase the incomes in one economy, but instead spread to other economies as well. The origin of this transformation is North-Western Europe. It was in England and Holland in the early 17th century where it became first possible to grow incomes over a sustained period of time.
The chart shows this. By incomes have doubled? Data on economic growth is now routinely published by statistical offices, but researchers have had to reconstruct accounts of the economic productivity for the past.
There are several reconstructions of GDP per capita over the last centuries; most widely used were for a long time the reconstructions by the British economist Angus Maddison. Maddison was working in Groningen in the Netherlands and after his death in the Groningen Growth and Development Centre is continuing this work.
Maddison attempted to reconstruct economic growth in all regions of the world and some of the estimates, especially in early publications, were more crude than others. In recent years several research teams have produced several much more detailed reconstructions of economic growth over the long run. These researchers put extensive work in these reconstructions and typically focused on one particular region or country only.
An example are the long-run reconstructions of the economy of Great Britain at the beginning of this entry.
Grundeinkommen / Reddito di base - Sepp Kusstatscher
The successors of Maddison in Groningen have then extended his original work by combining them with the many new reconstructions that were published in recent years. This project is referred to as the Maddison Project Database and this is the main source of long-run reconstructions of economic growth used today. The two charts below present the estimates of economic prosperity over the long run, as they were published by the Maddison Project Database in their big update in The authors published two different datasets as it is unfortunately not possible to rely on only one dataset to answer two different questions.
To answer questions on cross-country comparisons at different points in time one needs to rely on the "multiple benchmark" series shown in the world map below.
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To answer questions on economic growth in one country over time on the other hand, one needs to rely on the "single benchmark" series shown in the line chart view just below the world map. For more information on this difference see the documentation published by the researchers here. What we learn from this chart is that on average the people of the past were many times poorer than we are today. For all the hundreds, and really thousands, of years before , the average GDP per capita was even lower. Prosperity is a very recent achievement that distinguishes the last 10 or 20 generations from all of their ancestors.
If we compare the economic prosperity of every region today with any earlier time we see that every single region is richer than ever before in its history. Though the economies in some regions are more productive than others, every region is doing better than ever before. We study this aspect in more detail in our entry on global income inequality.
Grundeinkommen / Reddito di base
From the data that we have discussed previously, we know that with respect to economic growth all the action really just happened very recently. It is true that in the pre-growth era some people were very well off — but this was the tiny elite of the tribal leaders, pharaohs, kings and religious leaders. The economic inequality in pre-modern societies was extremely high and the average person was living in conditions that we would call extreme poverty today.
The destitution of the common man only changed with the onset of economic growth. The time when this change happened in various countries is depicted in the following graph. Economic prosperity was only achieved over the last couple of hundred years. In fact, it was mostly achieved over the second half of the last hundred years. The rise of global average incomes — global GDP per capita — shows when the world economy has become a positive-sum-game. This made it possible that when people in one place became richer, other people in other places could become richer at the same time.
For this I have used recent data from the World Bank for the period from onward and for the historical estimates before I rely on the historical estimates constructed by the economic historian Angus Maddison. For recent decades several international datasets on GDP are available.
It is now covering more than countries and data is available from onwards. The database is produced by a group of researchers from around the world and published by the 'Groningen Growth and Development Centre' at the University of Groningen — the website is here. The World Bank data in constant international-dollars is available from onwards.
Adjusting for the different price levels in different countries is necessary if one wants to compare living standards of people. The international-dollar — used in the maps above — makes these comparisons possible.
But if one is interested in comparing the per capita output of different economies it is useful to consider the output by simply using the exchange rates of the different currencies. The following chart plots, for each country, the national income in against the corresponding national income in GDP per capita is used to measure national incomes, and figures are expressed in 'real terms', which means they are adjusted for inflation. These are all the countries that experienced income growth over these 54 years. And a couple of countries such as Niger and the Democratic Republic of Congo have even experienced negative growth over the reference period.
But the large majority of countries, all those above the blue line, have experienced growth. Those countries that are far above the blue line had the strongest growth. Botswana fold increase , South Korea fold , Romania fold , China fold , and Thailand fold are some of the countries with the strongest growth over these 54 years. The discussion above focussed mostly on output per capita, the map below shows the total output by country. There are two ways to increase output over time: Increase inputs or to increase productivity, the ratio of output to input.
How it is possible to raise productivity can be most clearly seen when one considers a single industry only. Think about the production of books: Before the printing press was invented the only way to copy a book was for a scribe to copy it. Gregory Clark 11 estimates that the scribes who were doing this work back then were able to copy 3, words of plain text per day.
This implies that the production of one copy of the Bible meant days 4. This changed fundamentally when Johannes Gutenberg adopted the technology of the screw-type wine presses of the Rhine Valley where he was from to develop a printing press. The hours of work a printer had to put in was now measured hours rather than months. Estimates are that a worker was able to produce around 2.
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Over time printing presses were improved and during the Industrial Revolution they were mechanized and productivity of workers increased further. The Internet stands in this long tradition and as texts can now be seen by millions in an instant the productivity in the business of making texts available is off the charts. The visualization below shows the rising output of the economy by industry. Each time-series is indexed to the year so that the focus here is on the change over time as all changes are relative to that year. The rising output of key industrial and service sectors is shown here.
This means that the output per person in one year in the past was less than the output of the average person in two weeks today.
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It is remarkable how steady economic growth was over this very long period. From to GDP per person in the U. The chart below compares the economic growth at the technological frontier with the growth of countries that are further away from the technological frontier. In this chart the steepness of the growth path corresponds to the growth rate as GDP per capita is plotted on a logarithmic axis. Economies that are far away from the technological frontier can grow very rapidly.
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Catch up growth can be much faster than growth at the technological frontier. Urbanization and economic prosperity are strongly correlated as the following visualization shows. A survey asked the question "How important is religion in your life? There is a clear correlation between poverty and religiosity. In richer countries the share of the population for whom religion is very important is much lower.
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