Growth and Comparative Development Oded Galor 1 / 63
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Growth and Comparative Development Oded Galor Oded Galor Growth and Comparative Development 1 / 63 Introduction Comparative Development Oded Galor 00 00 + 00 00 -4 00 40 0 00 00 00 -3 -2 00 30 0 20 0 0 00 50 -1 00 15 0 00 00 10 00 10 0 00 50 0- 50 0 0- 30 30 0 00 01 10 0 0- 0 Income per Capita across the Globe in 2010 Growth and Comparative Development 2 / 63 Introduction Comparative Development Divergence across Regions: 1820–2010 30,000 GDP Per Capita (1990 Int'l $) 25,000 20,000 15,000 10,000 5,000 0 1820 1850 1880 Western Europe Latin America Oded Galor 1910 1940 Western Offshoots Asia Growth and Comparative Development 1970 2000 Eastern Europe Africa 3 / 63 Introduction Comparative Development Regional Income per Capita: 1–2010 30,000 GDP Per Capita (1990 Int'l $) 25,000 20,000 15,000 10,000 5,000 0 0 500 Western Europe Latin America Oded Galor 1000 Western Offshoots Asia Growth and Comparative Development 1500 2000 Eastern Europe Africa 4 / 63 Introduction Comparative Development Evolution of Inequality across Regions: 1–2010 Income per Capita (1990 Int’l $) 1 1000 1500 1820 2010 Western O¤shoots 400 400 400 1,302 29,564 Western Europe 576 427 771 1,455 20,889 Latin America 400 400 416 628 6,767 Asia 456 470 568 591 6,307 Africa 472 425 414 486 2,034 Richest-Poorest Ratio 1.4 1.2 2 3 15 Western O¤shoots: USA, Canada, Australia, New Zealand. Oded Galor Growth and Comparative Development 5 / 63 Introduction Comparative Development Inferences from Growth Theory Diminishing returns to physical and human capital accumulation Diminishing e¤ect of technological progress on productivity =) Reduction in inequality =) Convergence Oded Galor Growth and Comparative Development 6 / 63 Introduction Comparative Development .05 Density of Countries .15 .1 .2 .25 Income Distribution in 1960 4 6 8 Log Income per Capita 10 12 1960 Oded Galor Growth and Comparative Development 7 / 63 Introduction Comparative Development Lack of Convergence across Nations: 1960–1980 Oded Galor Growth and Comparative Development 8 / 63 Introduction Comparative Development .05 Density of Countries .15 .1 .2 .25 Lack of Convergence across Nations: 1960–2000 4 6 8 Log Income per Capita 1960 Oded Galor 1980 Growth and Comparative Development 10 12 2000 9 / 63 Introduction Comparative Development Ln GDP per Capita in 2010 (relative to the US) .7 1.1 .8 .6 .9 1 Persistent Inequality across Nations: 1980–2010 LUX MAC SGP NOR CHE USA BMU NLD AUS AUTSWE DNK DEU BELCAN FIN GBR FRA ISL JPN ITA ESP NZL GRC ISR BHR BRB SAU BHS TTO IRL HKG OMN CYP TWN KOR MLT PRT POL BWA MDV CHN GNQ BTN EGY CPV VNM MNG IND ARG LBN IRN DMA PAN CRI LCA MUS THA VCT PERDOM BRA GRD ZAF COL ALB BLZ TUN ECU SUR JOR JAM LKA KNA CHL ATG TUR ROU MYS BGR PRY GTM IDN SYR SWZ AGO BOL ZWE MAR PHL NAM FJI HUN URY GAB MEX VEN IRQ HND LAO SDN KHM TCD LSO MLI MOZ UGA NPL BFA ETH MWI SLV PAK MRT COG GHA NGA ZMB STPCMR BGD SEN GMB KEN BENTZA RWA COM GNB SLETGO MDG DJI CIV GIN CAF NER BDI LBR COD .6 Oded Galor .7 .8 .9 1 Ln GDP per Capita in 1980 (relative to the US) Growth and Comparative Development 1.1 10 / 63 Introduction Comparative Development Fundamental Research Questions What is the origin of the vast inequality in income per capita across countries and regions? What accounts for the divergence in per-capita income across countries in the past two centuries? What are the factors that inhibited the convergence of poor economies toward richer ones in the past decades? What is the role of deep-rooted factors in explaining the observed patterns of comparative development? Oded Galor Growth and Comparative Development 11 / 63 Phases of Development Phases of Development: Modes of Production Agriculture Industry Hunting-Gathering Oded Galor Growth and Comparative Development 12 / 63 Phases of Development Phases of Development: Standard of Living The Malthusian Epoch The Post-Malthusian Regime The Modern Growth Regime Oded Galor Growth and Comparative Development 13 / 63 Phases of Development Phases of Development: Timeline of the Most Developed Economies Malthusian Epoch (99.8%) 150K BP Oded Galor 1750s Growth and Comparative Development 14 / 63 Phases of Development Phases of Development: Timeline of the Most Developed Economies Malthusian Epoch (99.8%) 150K BP 1750s Post-Malthusian (0.1%) 1750s Oded Galor Growth and Comparative Development 1870s 2014 15 / 63 Phases of Development Phases of Development: Timeline of the Most Developed Economies Malthusian Epoch (99.8%) 150K BP 1750s Post-Malthusian (0.1%) 1750s 1870s 2014 Modern Growth (0.1%) 1870s Oded Galor Growth and Comparative Development 2014 16 / 63 Phases of Development World Income per Capita: 1–2010 8000 GDP Per Capita (1990 Int'l $) 6000 4000 2000 0 0 Oded Galor 250 500 750 1000 1250 Growth and Comparative Development 1500 1750 2000 17 / 63 Phases of Development Growth of World Income per Capita: 1–2010 1.5% 1.0% 0.5% 0.0% 1-1000 Oded Galor 1000-1500 1500-1820 Growth and Comparative Development 1820-2010 18 / 63 Phases of Development The Malthusian Epoch The Malthusian Epoch Stagnation – Absence of economic growth Characteristics of the period: Income per capita (above subsistence) has a positive e¤ect on population growth Diminishing returns to labor (re‡ecting the existence of …xed factor) Technological progress, land expansion or adverse shock to population Increases (temporarily) the marginal productivity of labor The level of income per capita increases (above subsistence) Population increases, as long as income remains above subsistence Marginal productivity of labor declines towards its long-run level Income per capita returns to the subsistence level in the long-run Technologically advanced & land-rich economies: Higher population density Largely similar levels of income per-capita in the long-run Oded Galor Growth and Comparative Development 19 / 63 Phases of Development The Malthusian Epoch 200 8.00 150 6.00 100 4.00 50 2.00 0 Population (millions) Real Farm Wages (1775=100) Malthusian Adjustments to the Black Death: England, 1250–1750 0.00 1255 1295 1335 1375 1415 1455 1495 1535 1575 1615 1655 1695 1735 Real Wages Oded Galor Population Growth and Comparative Development 20 / 63 Phases of Development The Malthusian Epoch Land Productivity and Population Density in 1500 Conditional on transition timing, geographical factors, and continental …xed e¤ects. Source: Ashraf-Galor (AER 2011) Oded Galor Growth and Comparative Development 21 / 63 Phases of Development The Malthusian Epoch Land Productivity and Income per Capita in 1500 Conditional on transition timing, geographical factors, and continental …xed e¤ects. Source: Ashraf-Galor (AER 2011) Oded Galor Growth and Comparative Development 22 / 63 Phases of Development The Malthusian Epoch Technology and Population Density in 1500 Years elapsed since the Neolithic Transition re‡ects the technological level in 1500. Conditional on land productivity, geographical factors, and continental …xed e¤ects. Oded Galor Source: Ashraf-Galor (AER 2011) Growth and Comparative Development 23 / 63 Phases of Development The Malthusian Epoch Technology and Income per Capita in 1500 Years elapsed since the Neolithic Transition re‡ects the technological level in 1500. Conditional on land productivity, geographical factors, and continental …xed e¤ects. Source: Ashraf-Galor (AER 2011) Oded Galor Growth and Comparative Development 24 / 63 Phases of Development The Post-Malthusian Regime The Post-Malthusian Regime Characterized by the onset of economic growth: Technological progress accelerates Income per capita still has a positive e¤ect on population growth Technological progress: Increases output more than population =) growth in income per capita Oded Galor Growth and Comparative Development 25 / 63 Phases of Development The Post-Malthusian Regime Regional Variation in the Timing of the Take-o¤ 30,000 GDP Per Capita (1990 Int'l $) 25,000 20,000 15,000 10,000 5,000 0 1700 1750 1800 Western Europe Latin America Oded Galor 1850 1900 Western Offshoots Asia Growth and Comparative Development 1950 2000 Eastern Europe Africa 26 / 63 Phases of Development The Post-Malthusian Regime Take-o¤: Growth of Population & Income per Capita – World 1.0% 0.8% 0.6% 0.4% 0.2% 0.0% 1000-1500 1500-1820 Growth of income per capita Oded Galor 1820-1913 Growth of population Growth and Comparative Development 27 / 63 Phases of Development The Post-Malthusian Regime Take-o¤: Growth of Population & Income per Capita – Western O¤shoots 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% 1000-1500 1500-1820 Growth of income per capita Oded Galor 1820-1913 Growth of population Growth and Comparative Development 28 / 63 Phases of Development The Post-Malthusian Regime Take-o¤: Growth of Population & Income per Capita – Western Europe 1.0% 0.8% 0.6% 0.4% 0.2% 0.0% 1000-1500 1500-1820 Growth of income per capita Oded Galor 1820-1913 Growth of population Growth and Comparative Development 29 / 63 Phases of Development The Post-Malthusian Regime Take-o¤: Growth of Population & Income per Capita – Latin America 1.5% 1.0% 0.5% 0.0% 1000-1500 1500-1820 Growth of income per capita Oded Galor 1820-1913 Growth of population Growth and Comparative Development 30 / 63 Phases of Development The Post-Malthusian Regime Take-o¤: Growth of Population & Income per Capita – Africa 1.0% 0.8% 0.6% 0.4% 0.2% 0.0% 1000-1500 1500-1820 Growth of income per capita Oded Galor 1820-1913 Growth of population Growth and Comparative Development 31 / 63 Phases of Development The Post-Malthusian Regime Take-o¤: Growth of Population & Income per Capita – Asia 1.0% 0.8% 0.6% 0.4% 0.2% 0.0% 1000-1500 1500-1820 Growth of income per capita Oded Galor 1820-1973 Growth of population Growth and Comparative Development 32 / 63 Phases of Development The Post-Malthusian Regime Take-o¤ & Increased Industrialization per Capita Per Capita Industrialization 675 450 225 0 1750 1800 USA Oded Galor 1850 Germany Canada 1900 United Kingdom Growth and Comparative Development 1950 France 2000 Japan 33 / 63 Phases of Development The Post-Malthusian Regime Take-o¤ in Developed Economies & Decline in Industrialization in LDCs Per Capita Industrialization 30 20 10 0 1750 1800 1850 Third World Oded Galor 1900 India Growth and Comparative Development 1950 2000 China 34 / 63 Phases of Development The Modern Growth Regime The Modern Growth Regime Sustained economic growth Acceleration in technological progress =) Industrial demand for human capital Human capital formation =) Decline in fertility rates (substitution of quantity by quality) The decline in population growth =) Freed the growth process from counterbalancing e¤ects of population growth Technological progress, human capital formation & decline in population growth =) Sustained economic growth Oded Galor Growth and Comparative Development 35 / 63 Phases of Development The Demographic Transition Oded Galor + 0 5 0 5 0 .A N 90 -9 75 -7 60 -6 45 -4 30 -3 15 0- 15 Variation in years Elapsed since the Onset of the Fertility Decline Growth and Comparative Development 36 / 63 Phases of Development The Demographic Transition Early Fertility Decline – Western O¤shoots 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% 1000-1500 Oded Galor 1500-1820 1820-1870 1870-1913 Growth and Comparative Development 1913-1950 37 / 63 Phases of Development The Demographic Transition Early Fertility Decline – Western Europe 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% 1000-1500 Oded Galor 1500-1820 1820-1870 1870-1913 Growth and Comparative Development 1913-1950 38 / 63 Phases of Development The Demographic Transition Early Fertility Decline – Eastern Europe 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% 1000-1500 Oded Galor 1500-1820 1820-1870 1870-1913 Growth and Comparative Development 1913-1950 39 / 63 Phases of Development The Demographic Transition Late Fertility Decline – Latin America 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% 1000-1500 Oded Galor 1500-1820 1820-1870 1870-1913 1913-1950 Growth and Comparative Development 1950-1973 1973-1998 40 / 63 Phases of Development The Demographic Transition Late Fertility Decline – Asia 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% 1000-1500 Oded Galor 1500-1820 1820-1870 1870-1913 1913-1950 Growth and Comparative Development 1950-1973 1973-1998 41 / 63 Phases of Development The Demographic Transition Late Fertility Decline – Africa 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% 1000-1500 1500-1820 1820-1870 1870-1913 1913-1950 1950-1973 1973-1998 1998-2010 Oded Galor Growth and Comparative Development 42 / 63 Phases of Development The Demographic Transition 4 Timing of the Demographic Transition and Current Income per Capita Log Income Per Capita in 2005 -2 0 2 MYS SYC USA TTO CHE ECU KWT NOR SUR VEN BHR ISR ATG DNK AUT COL FRASWE GBR PAN DEU BEL ITA NLD CRI CAN FIN KEN SAU KOR BRA ESP LBY MEX PRT ARG MUS PER BLZ URY IDNGUY JAM BWA LBN CHL THA SLV LKA DOM RWA ZAF HUN CMR GTM NAM PHL DZA AGO CIVTUN DJI JOR NIC BOL IRN PRY HND EGY TZA SWZ ROM BGR MAR NGA CHN ALB GHA GIN SEN SYR VNM COM CAF BEN SDN TGO AZE IND BDI ARM KHM BTN GEO ZMB HTI GMB MRT LAO LBR LSO ETHBGD UZB ZWE MLI MDG ERI MWI MNG NER NPL KGZ -4 JPN -2 -1 0 1 Years Elapsed since the Demographic Transition 2 coef = 1.3462847, (robust) se = .10852591, t = 12.41 Conditional on absolute latitude. Oded Galor Growth and Comparative Development 43 / 63 Phases of Development The Demographic Transition Timing of the Demographic Transition and Divergence across Regions 30,000 GDP Per Capita (1990 Int'l $) 25,000 20,000 15,000 10,000 5,000 0 1870 1900 Western Europe Latin America Oded Galor 1930 1960 Western Offshoots Asia Growth and Comparative Development 1990 Eastern Europe Africa 44 / 63 Phases of Development The Demographic Transition Sustained Economic Growth: 1870–2000 GDP Per Capita (log scale) 50,000 5,000 500 1870 1880 1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 Western Europe Oded Galor Western Offshoots Growth and Comparative Development 45 / 63 Phases of Development The Demographic Transition Regional Variation in Growth of Income per Capita: 1950–2000 GDP Per Capita (log scale) 50,000 5,000 500 1950 1960 Western Europe Asia Oded Galor 1970 1980 Western Offshoots Eastern Europe Growth and Comparative Development 1990 2000 Africa Latin America 46 / 63 Challenges for Growth Theory Challenges for Growth Theory Optimal Growth Theory & Endogenous Growth Theory Focus on the modern growth regime Do not capture the growth process over most of human history Do not capture the vast inequality across countries Unable to address any of the following fundamental questions Oded Galor Growth and Comparative Development 47 / 63 Challenges for Growth Theory Fundamental Research Questions: The Malthusian Epoch What accounts for the epoch of stagnation that characterized most of human history? Why did episodes of technological progress in the pre-industrialization era fail to generate sustained economic growth? Why did increased productivity generated population growth rather than growth in income per capita? Oded Galor Growth and Comparative Development 48 / 63 Challenges for Growth Theory Fundamental Research Questions: Transition from Stagnation to Growth What are the factors that generated the transition from stagnation to growth of DCs? What are the hurdles faced by LDCs in the transition from stagnation to growth? What triggered the demographic transition? Is the demographic transition a necessary condition for sustained economic growth? Oded Galor Growth and Comparative Development 49 / 63 Challenges for Growth Theory Fundamental Research Questions: Comparative Development What accounts for the transition from stagnation to growth in some countries and the persistent stagnation in others? What governs the di¤erential timing of the demographic transition across nations? What is the origin of the vast inequality that emerged across countries in the past two centuries? Has the earlier transition of advanced economies adversely a¤ected the process of development in LDCs? What is the contribution of deep rooted factors to the vast inequality across countries? Oded Galor Growth and Comparative Development 50 / 63 Challenges for Growth Theory Evolution of Growth Theory Proximate Causes of Growth Factor Accumulation: Physical capital accumulation (Solow, QJE 1956) Human capital accumulation (Lucas, JME 1988) Technological Progress: Endogenous Growth Oded Galor (Romer, JPE 1990; Grossman-Helpman, 1991; Aghion-Howitt, ECT 1992) Growth and Comparative Development 51 / 63 Challenges for Growth Theory Evolution of Growth Theory Non-Uni…ed Growth Theory (GT) Inconsistent with the development process over most of human history: GT: growth rates decline in the transition to sustained growth Evidence: non-decreasing growth rates in the development of DCs GT: technological progress increases steady-state income per capita Malthusian Epoch - tech progress had no e¤ect on LR income GT: does not capture the demographic transition (DT) Evidence: DT is central for the take-o¤ to modern growth GT: does not capture the take-o¤ from stagnation to growth Evidence: key for the understanding of comparative development GT: convergence Evidence: divergence in the past two centuries Oded Galor Growth and Comparative Development 52 / 63 Challenges for Growth Theory Evolution of Growth Theory Non-Uni…ed Growth Theory Captures the role of factor accumulation and technological progress in the modern growth regime Not designed to shed light on: The historical origins of vast and persistent inequality across countries The forces that triggered the transition of DCs from stagnation to growth The hurdles faced by LDCs in their take-o¤ from stagnation to growth The factors that hindered convergence across countries The role of deep rooted factors in comparative development Oded Galor Growth and Comparative Development 53 / 63 Challenges for Growth Theory Evolution of Growth Theory Uni…ed Growth Theory Oded Galor Growth and Comparative Development 54 / 63 Challenges for Growth Theory Evolution of Growth Theory Uni…ed Growth Theory Captures the: Process of development in its entirety Forces that permitted the transition from stagnation to growth Hurdles faced by LDCs in their transitions from stagnation to growth The origins of the uneven distribution of wealth across the globe Persistent e¤ect of initial biogeographical factors on the growth process Oded Galor Growth and Comparative Development 55 / 63 Evolution of the Growth Literature Major Challenge Policy based on insights from growth theory encourage Investment in education and health Openness to international capital markets Technological di¤usion =) failed to generate convergence Why do some societies fail to: E¢ ciently invest in physical and human capital? Adopt advance technologies? Oded Galor Growth and Comparative Development 56 / 63 Evolution of the Growth Literature More Fundamental Causes of Growth Barriers to Accumulation and Innovation Inequality Suboptimal accumulation of human and physical capital Credit market imperfections (Galor-Zeira, RES 1993) Sociopolitical instability (Alesina et al., JEG 1996) Inferior institutions (Engerman-Sokolo¤, 1997) Ine¢ cient provision of education (Galor-Moav-Vollrath, RES 2009) Ine¢ cient Institutions (limited protection of property rights & rule of law) Reduced incentive to accumulate/innovate (North, 1981; Acemoglu-Robinson, 2012) Ethnic fractionalization Sociopolitical instability & Ine¢ cient provision of public goods Suboptimal investment (Easterly-Levine, QJE 1997; Alesina et al., JEG 2003) Limited Social capital (limited trust & cooperation) Suboptimal investment Oded Galor (Putnam, 1993; Guiso et al., JEP 2006; Tabellini, JEEA 2010) Growth and Comparative Development 57 / 63 Evolution of the Growth Literature More Fundamental Causes of Growth Colonialism and the Persistent E¤ects of Institutions and Human Capital Persistent e¤ect of institutions implemented by colonial powers Reversal of fortune (Engerman-Sokolo¤, 1997; Acemoglu et al., AER 2001, QJE 2002) Exclusive institutions imposed in densely populated areas Inclusive institutions implemented in sparsely populated areas Slavery (Nunn, QJE 2008) Persistent e¤ect of the human capital and diversity brought by the colonists Larger e¤ect of colonizers in sparsely populated areas (Glaeser et al., JEG 2004; Easterly-Levine, 2012; Ashraf-Galor, 2014) Persistent e¤ect of the legal system of colonial powers Common law (Britain) is more complementary than civil law (France, Spain & Portugal) to the development of …nancial systems (La Porta et al., JF 1997) Persistent e¤ect of arti…cial borders & ethnic division created by colonists Sub-Saharan Africa Oded Galor (Alesina et al., JEEA 2011; Papaioannou-Michalopoulos, ECT 2012) Growth and Comparative Development 58 / 63 Evolution of the Growth Literature More Fundamental Causes of Growth Origin and Persistence of Cultural Factors Geographical origins and persistence of: Trust & cooperation (Guiso et al., QJE 2009; Algan-Cahuc, AER 2010; Durante, 2010; Litina, 2012) Cultural diversity (Ashraf-Galor, 2012) The European Marriage Pattern (Voigtlander-Voth, AER 2013) Female labor force participation (Alesina et al., QJE 2013) Technological origins and persistence of: Female emancipation & labor force participation (Galor-Weil, AER 1996; Fernández- Fogli-Olivetti, QJE 2004; Greenwood-Seshadri-Yorukoglu, RES 2005; Doepke-Tertilt, QJE 2009) Religious origins of: Preferences for human capital (Becker-Woessmann, QJE 2009; Botticini-Eckstein, 2012) Work ethic & thrift & entrepreneurial spirit (Weber, 1905; Andersen et al., 2013) Intergenerational transmission of: Preferences for human capital (Galor-Moav, QJE 2002) Entrepreneurial spirit & thrift (Deopke-Zilibotti, QJE 2008; Galor-Michalopoulos, JET 2012) Oded Galor Growth and Comparative Development 59 / 63 Evolution of the Growth Literature Ultimate Causes of Growth Persistent E¤ects of Geographical Factors Biogeographical conditions that triggered the Neolithic Revolution Technological head-start: (Diamond, 1997; Olsson-Hibbs, EER, 2005) Persistent e¤ect on population density (1-1500) (Ashraf-Galor, AER 2011) No e¤ect on contemporary income per capita (Ashraf-Galor, AER 2013) Persistence e¤ect on life expectancy (Galor-Moav, 2009) Disease environment Persistent e¤ect on labor productivity & investment in human capital (Gallup-Sachs, 2001; Andersen-Dalgaard-Selaya, 2012) Geographical isolation Reduced trade and technological di¤usion (Gallup-Mellinger-Sachs, 1999) Persistence of culture conducive for innovations (Ashraf-Galor-Ozak, JEEA 2010) Oded Galor Growth and Comparative Development 60 / 63 Evolution of the Growth Literature Ultimate Causes of Growth Persistent E¤ects of Geographical Factors Land suitable for large plantations Inequality: Extractive institutions (Engerman-Sokolo¤, 1997) Concentration of landownership: Suboptimal investment in public education (Galor-Moav-Vollrath, RES 2009) Soil quality conducive for agriculture Specialization in unskilled-intensive goods Reduces human capital formation & increases fertility & slows the transition to modern growth (Galor-Mountford, RES 2008) Oded Galor Growth and Comparative Development 61 / 63 Evolution of the Growth Literature Ultimate Causes of Growth Persistent E¤ects of Geographical Factors Range of soil quality Emergence of geographical speci…c human capital =) reduced mobility =) ethnic fractionalization (Michalopoulos, AER 2012) Persistent e¤ect of ethnic fractionalization (Easterly-Levine, QJE 1997) Ecological diversity & storable crops Emergence & persistence of state capacity (Fenske, JEEA 2014; Mayshar-Moav-Neeman, 2013) Geographical determinants of body size Determined fertility & income per capita in the Malthusian epoch and the timing of the take-o¤ (Dalgaard-Strulik, 2013) Oded Galor Growth and Comparative Development 62 / 63 Evolution of the Growth Literature Ultimate Causes of Growth Persistent E¤ects of Genetic Factors Natural selection of traits that are complementary to the growth process: Preference for education (Galor-Moav, QJE 2002; Galor-Klemp, 2015) Entrepreneurial spirit (Galor-Michalopoulos, JET 2012) Genetic distance between societies reduces: Di¤usion from the technological frontier Interstate wars (Spolaore-Wacziarg, 2013) (Spolaore-Wacziarg, QJE 2009) Genetic diversity (GD) within a society: Reduces cohesiveness: Higher cultural fragmentation (Ashraf-Galor, AER-PP 2013) Increased mistrust & prevalence of civil con‡ict (Arbatli-Ashraf-Galor, 2013) Generates a wider range of complementarity traits conducive for innovations Has a hump-shaped e¤ect on productivity (Ashraf-Galor, AER 2013) Lower income in overly homogenous & diverse societies Oded Galor Growth and Comparative Development 63 / 63
