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The new growth economics has restored technological progress to the center of the debate about why economic growth occurs. There is no question that in some way new technology can bring about a period of rapid economic growth, whether measured in terms of productivity growth or in the more subtle improvements in the quality of life that occur through improvements in product diversity and attributes. The conventions of National Income accounting truncate to some extent the richness of the process, since they downweight inexpensive improvements that represent very large improvements in consumer surplus such as indoor plumbing, anaesthesia, and vitamin supplements.

Yet it remains an open question to what extent technology played an important role in economic growth before the Industrial Revolution. Most scholars tend to emphasize institutional changes that made more efficient allocations possible. These institutional arrangement form the core of the new Comparative Institutional Economics pioneered by Douglass North and Avner Greif, which has placed the spontaneous emergence of institutions that enforced contracts through better property rights, acceptable arbitration arrangements, and the kind of institutions that created strong incentives that overcame opportunistic behavior, rent-seeking, and reduce uncertainty. Such arrangements, it has long been understood, created a revival of commercial activity thus securing gains from trade, and allowed for a more efficient allocation of resources. For much of the pre-1750 periods, what growth there was seemed to emanate from such institutional changes. The rise of the Italian city states and the Dutch miraculous golden age were largely based on such historical processes. True, there were technological components to this expansion (especially those improving navigation and shipbuilding, providing defense against predators, and streamlining communications), but it is hard to argue that before the Industrial Revolution there was sufficient momentum to these changes to trigger much growth.

The reason for this is not the lack of inventiveness as such; from the early middle ages, Europe was in many ways a technologically creative society, as many authors have emphasized, none with a richer grasp of the facts and more élan than the late Lynn White. The reason why these inventions did not turn into a self-sustaining process of growth are explored in my book and I cannot only summarize them here. One explanation which has been quite influential has to do with diffusion: the inventions spread only slowly because of poor communications, the difficulty of adapting to local circumstances, and so on. Yet the speed at which some of the more spectacular medieval inventions, from eyeglasses to mechanical clocks to gunpowder to mapmaking spread, while slow by modern standards, still implies that knowledge flowed across regional and national boundaries without too much difficulty.

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