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Economic Development and Labor Conditions

Robert J. Flanagan

in Globalization and Labor Conditions

This chapter reveals the influence of economic development, national economic and political institutions, and social diversity on labor conditions. Putting globalization aside, the foremost positive ... More

This chapter reveals the influence of economic development, national economic and political institutions, and social diversity on labor conditions. Putting globalization aside, the foremost positive influence on labor conditions is level of development (a country’s real per capita income). Policies that raise per capita income improve virtually all labor conditions. At any level of development, however, countries still differ in their labor conditions. The chapter shows how democratic government, protection of property rights, and the degree of ethnic and religious diversity influence this remaining international variation in labor conditions.Less

Country Comparisons

Fred Campano and Dominick Salvatore

in Income Distribution: Includes CD

This chapter compares the living standards between countries. Per capita comparisons and the estimation of international poverty thresholds are discussed in light of purchasing power parity and ... More

This chapter compares the living standards between countries. Per capita comparisons and the estimation of international poverty thresholds are discussed in light of purchasing power parity and market or official exchange rates. The United Nations Development Programme’s Human Development Index is discussed.Less

Big Bills Left on the Sidewalk: Why Some Nations Are Rich, and Others Poor

Mancur Olson

in A Not-so-dismal Science: A Broader View of Economies and Societies

The idea is advanced that it is the rationality of individuals in societies that makes them achieve their production potential rather than their per capita productive resources, and that the ... More

The idea is advanced that it is the rationality of individuals in societies that makes them achieve their production potential rather than their per capita productive resources, and that the low‐income countries of the Second and Third Worlds are poor mainly because they are much further below their potential incomes than are rich countries. If these countries were to improve their governance and institutions sufficiently, there would be huge gains from foreign investment and advanced technologies, which are for the most part, available at relatively modest cost to poor countries. The evidence for this view is taken from studies of the borders of countries and the flows of labour (migration) and capital that cross them, and data on per capita income in relation to population density.Less

Economic Development and Institutional Change, 1914–1950

Şevket Pamuk

in Uneven Centuries

This chapter explains how the period 1913 to 1950 was exceptionally difficult for Turkey. The country had to deal with the difficulties of the transition from being part of a larger empire to ... More

This chapter explains how the period 1913 to 1950 was exceptionally difficult for Turkey. The country had to deal with the difficulties of the transition from being part of a larger empire to becoming a nation-state within new borders. Available data suggest income per capita declined by as much as 40 percent during World War I and remained depressed until the end of the War of Independence in 1922. Per capita incomes then increased rapidly in the 1920s and caught up with their pre-World War I levels and may have even slightly exceeded them by 1929. They then fell sharply, by more than 30 percent during World War II. Given these very large fluctuations in per capita income, it makes a big difference which end years are used in calculating the average growth rates for this period.Less

Economic Growth in a Malthusian Empire

Peter Temin

in The Roman Market Economy

This chapter examines Rome's lack of an industrial revolution. Without this momentous change, Rome was subject to Malthusian pressures that limited its economic growth. Yet Malthusian economies can ... More

This chapter examines Rome's lack of an industrial revolution. Without this momentous change, Rome was subject to Malthusian pressures that limited its economic growth. Yet Malthusian economies can have economic growth, which means having rising standards of living. The Malthusian theory of population change argues that changes in productivity lead to changes in the size of the population, but leave the level of per capita income. The chapter shows dynamics providing a way to acknowledge growing per capita income in the basically Malthusian world of the early Roman Empire. It also provides a way to ask if the Romans could have escaped the Malthusian constraints.Less

Income Inequality in China and its Influencing Factors

Xiaolu Wang

in Inequality and Growth in Modern China

While the average level of income per capita has increased rapidly in China, income inequality is becoming a more serious problem that may threaten social stability and the sustainability of economic ... More

While the average level of income per capita has increased rapidly in China, income inequality is becoming a more serious problem that may threaten social stability and the sustainability of economic development. This chapter examines the existence in China of an inverted U-shaped curve between income inequality and economic development (known as Kuznets curve), and tests for the effects of several factors possibly influencing income inequality. These factors relate to growth, institutional arrangements, income redistribution and social security systems, and provision of public goods and infrastructure. Panel data modelling based on provincial level observations predicts an increasing trend of inequality in the future.Less

Economic Development and Institutional Change, 1980–2015

Şevket Pamuk

in Uneven Centuries

This chapter explores how, in the decades after World War II, Turkey had attained unprecedented rates of growth by raising both its savings and investments rates from 11 percent of GDP in the early ... More

This chapter explores how, in the decades after World War II, Turkey had attained unprecedented rates of growth by raising both its savings and investments rates from 11 percent of GDP in the early 1950s to 22 percent of GDP in the late 1970s. Investments in plant and equipment as well as education were financed primarily by domestic savings, even though as per capita incomes continued to rise after 1980, the savings rate did not rise. The growing dependence on short-term foreign capital inflows caused a significant increase in macroeconomic instability. The fluctuations in short-term movements of capital, arising from both global trends and domestic political instability, have led to major fluctuations in the economy since 1980.Less

Depression, Drought, and Federation

Ian W. McLean

in Why Australia Prospered: The Shifting Sources of Economic Growth

This chapter talks about negative shocks from internal imbalance, external factors, and drought wrought havoc with the economy for more than a decade. Against this background of a major threat to ... More

This chapter talks about negative shocks from internal imbalance, external factors, and drought wrought havoc with the economy for more than a decade. Against this background of a major threat to prosperity, important changes occurred in the institutional framework with the federation of the Australian colonies in 1901. Though some recovery in economic fortunes occurred before the outbreak of war, it was short-lived. Per capita real GDP fell by 22 percent by 1895 and did not regain its 1889 peak for a full two decades. The approach adopted here includes a comparative perspective on Australians' reduced levels of prosperity between 1890 and 1914. Australia recorded the highest per capita income in the world for some period prior to the 1890s. The chapter shows how this achievement has never been repeated.Less

Institutions and Outcomes

Daniel Berkowitz and Karen B. Clay

in The Evolution of a Nation: How Geography and Law Shaped the American States

This chapter summarizes this volume's main findings with respect to persistence and mechanisms, examines the effect of state political and legal institutions on per capita income, and discusses ... More

This chapter summarizes this volume's main findings with respect to persistence and mechanisms, examines the effect of state political and legal institutions on per capita income, and discusses important areas for future research. The overall focus on state per capita income is important here, because it represents an important measure of total economic activity in a society. Courts and legislatures may have other objectives, but arguably one of their functions is to maximize the size of the societal pie by offering incentives for economic activity. Moreover, the chapter argues that a better understanding of how and why institutions are persistent can inform efforts at change.Less

The Economy under the Raj, I:Overall Trends

Deepak Lal

in The Hindu Equilibrium: India c.1500 B.C. - 2000 A.D.

This chapter surveys economic trends from 1857 to 1947 of fully-fledged British rule. Topics covered include population, per capita income, sectoral output growth, urbanization, literacy, and infant ... More

This chapter surveys economic trends from 1857 to 1947 of fully-fledged British rule. Topics covered include population, per capita income, sectoral output growth, urbanization, literacy, and infant mortality.Less

Conclusion

Şevket Pamuk

in Uneven Centuries

This concluding chapter discusses how most countries around the world have experienced significant increases in per capita income and improvements in human development during the last two centuries. ... More

This concluding chapter discusses how most countries around the world have experienced significant increases in per capita income and improvements in human development during the last two centuries. For instance, GDP per capita in the area within Turkey's current borders has increased approximately fifteenfold since 1820. While Turkey did slightly better than the averages for the developing countries, the gap with developed countries widened significantly. The most basic reason for this pattern was the relatively rapid industrialization in Western Europe and North America, while Turkey as well as other developing countries stayed mostly with agriculture. The most important proximate cause of the large divergence in per capita incomes between Western Europe and much of the rest of the world was the very different rates of adoption of the new technologies of the Industrial Revolution.Less

Growth and Development in the Indian States: An Overview

Arvind Panagariya, Pinaki Chakraborty, and M. Govinda Rao

in State Level Reforms, Growth, and Development in Indian States

The chapter documents growth and progress in combating poverty, illiteracy, and ill-health in India. It shows that growth in the Indian states has accelerated across the board in the 2000s. Quite ... More

The chapter documents growth and progress in combating poverty, illiteracy, and ill-health in India. It shows that growth in the Indian states has accelerated across the board in the 2000s. Quite remarkably, some of the fastest growing states in the country such as Bihar, Orissa, Jharkhand, and Chhattisgarh are the poorest. Poverty has declined in every single state, with the rate of poverty reduction accelerating in the latest, fast-growth phase. Finally, on average, states with higher per capita incomes enjoy lower rates of poverty; higher rates of other measures of prosperity such as permanent houses, electricity and toilet facilities; higher literacy rates; and better health outcomes such as lower infant mortality rates and higher life expectancy.Less

Time Since What? (Re)interpreting the Neolithic Transition in a Malthusian Environment

Nils-Petter Lagerlöf

Matteo Cervellati and Uwe Sunde (eds)

in Demographic Change and Long-Run Development

This chapter provides a reinterpretation of the positive correlation between the time since the Neolithic transition and per-capita income before the economic and demographic transitions. It shows ... More

This chapter provides a reinterpretation of the positive correlation between the time since the Neolithic transition and per-capita income before the economic and demographic transitions. It shows that in a simple Malthusian model, the differences in development might be amplified by territorial competition between societies or an upper bound on the rate of population growth, suggesting that superstructures, such as empires, and behavioral norms might have played a decisive role during this phase of development. The chapter argues, however, that while a useful theoretical insight, this simple extension of the Malthusian model is not itself sufficient to account quantitatively for the observed variation in both per-capita incomes and population densities.Less

When Did Latin America Fall Behind?

Leandro Prados de la Escosura

in The Decline of Latin American Economies: Growth, Institutions, and Crises

This chapter reexamines the timing of Latin America's economic retardation—first, by using a more representative comparator, such as a group of countries included under the OECD acronym, and second, ... More

This chapter reexamines the timing of Latin America's economic retardation—first, by using a more representative comparator, such as a group of countries included under the OECD acronym, and second, by resorting to the tools employed in the inequality literature. Among the main findings of the chapter that can be highlighted are that, contrary to widespread belief, it was during the late twentieth century that Latin America fell behind more dramatically. A long-term rise in real average per capita income inequality is found for a large sample of countries encompassing most of Europe, the Americas, and Oceania. The rise in intercountry inequality resulted from the widening gap between the OECD countries (Australia, Canada, New Zealand, United States, Japan) and Latin America, as opposed to the reduction in income differences within each of these country groups. As a result, polarization emerged.Less

Technology in the Great Divergence

Gregory Clark and Robert C. Feenstra

in Globalization in Historical Perspective

This chapter examines the changes in per capita income and productivity from 1800 to modern times. It demonstrates the following: (1) There has been increasing inequality in incomes per capita across ... More

This chapter examines the changes in per capita income and productivity from 1800 to modern times. It demonstrates the following: (1) There has been increasing inequality in incomes per capita across countries since 1800 despite substantial improvements in the mobility of goods, capital, and technology. (2) The source of this divergence was increasing differences in the efficiency or total factor productivity of economies. (3) These differences in efficiency were not due to the inability of poor countries to get access to the new technologies of the Industrial Revolution. Instead, differences in the efficiency of use of new technologies explain both low levels of income in poor countries and the slow adoption of Western technology. (4) The pattern of trade from the late nineteenth century between the poor and the rich economies should in principle reveal whether the problem of the poor economies was peculiarly a problem of employing labor effectively. A commentary is also included at the end of the chapter.Less

Health Indicators in the Indian States

Arvind Panagariya, Pinaki Chakraborty, and M. Govinda Rao

in State Level Reforms, Growth, and Development in Indian States

This chapter assesses the progress in improving health outcomes in Indian states. It shows that all states in India have made substantial progress in improving the vital health statistics such as ... More

This chapter assesses the progress in improving health outcomes in Indian states. It shows that all states in India have made substantial progress in improving the vital health statistics such as life expectancy, infant mortality rate, and child mortality ratio. While the achievements vary across states, even the poorest states have made measurable progress. The progress exhibits strong association with per capita income. With rare exceptions, bottom five states by per capita income—Bihar, Uttar Pradesh, Assam, Madhya Pradesh, and Rajasthan—also end up among the bottom five according to vital health statistics. The chapter counters the general impression that India has made no progress in improving child nutrition by presenting evidence to the contrary. It also points to serious methodological problems in the measurement of both child and adult malnutrition. It argues that India nevertheless remains very far from achieving its potential health standards. It documents continuing deficiencies in a number of areas.Less

Long-run economic growth

Jesper Rangvid

in From Main Street to Wall Street: How the Economy Influences Stock Markets and What Investors Should Know

This chapter explains what we understand by ‘aggregate economic activity’, i.e. Gross Domestic Product, per capita income, population growth, and related concepts that will all be used repeatedly ... More

This chapter explains what we understand by ‘aggregate economic activity’, i.e. Gross Domestic Product, per capita income, population growth, and related concepts that will all be used repeatedly throughout the book. The chapter shows how economic activity has developed historically, using both US and international data. The chapter does not analyze what causes long-run economic growth to be high or low, as subsequent chapters deal with this. Instead, the chapter deals with the concepts and stylized facts such that thesecan be used when analysing their implications for asset markets in subsequent chapters.Less