Sunday, March 16, 2008

Economic Growth Lecture of the Day

Oded Galor on Natural Selection and the Origin of Economic Growth;

Oded Galor presents his collaborative research with Omer Moav on an evolutionary growth theory that captures the interplay between the evolution of mankind and economic growth since the emergence of the human species. The researchers argue that for much of man’s existence his life was characterized as a stagnant period of struggle for survival and that a gradual process of selection changed the composition of types within the human population and made it more complimentary to the growth process. Additionally, this change in human types permitted the take-off from stagnation to economic growth.

The model for their research is based on four fundamental elements: the main ingredients of the Malthusian world (economies characterized by fixed factors of production and subsistence consumption); the main ingredients of Darwinian evolution (variety, intergenerational transmission of traits, and natural selection); a link between evolution of the human species to the process of economic growth; and a link between the rate of technological progress, demographic transitions, and sustained economic growth.

According to Dr. Galor, increases in the return to human capital induce parents to substitute quantity for quality of children. This bias towards quality offspring increased as technological progress intensified, reinforcing the growth process and allowing mankind to break free of the Malthusian trap. In their research, Galor and Moav conclude that this set the stage for the industrial revolution and eventually, the modern world eceonomy.

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