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Modern Growth

Modern Growth. Chapter 10. Finally, we escaped. Mislabeling history. Most observable changes: industrial sector 70%-80% of the population in agriculture Nothing really industrial about the IR Agricultural productivity increased as much as the rest of the economy. Modern growth.

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Modern Growth

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  1. Modern Growth Chapter 10

  2. Finally, we escaped

  3. Mislabeling history • Most observable changes: industrial sector • 70%-80% of the population in agriculture • Nothing really industrial about the IR • Agricultural productivity increased as much as the rest of the economy

  4. Modern growth • Growth in income per person ca. 1860s (IR ca. 1760 in England) • Gap between rich and poor economies: • 40:1 • Income per capita in England: • 10-fold (1260-2000) • Decrease in population in agriculture: • 50%-80% in preindustrial times • 2.1% in the US today • 3% in France today • Changes in social life: • Increase in urbanization

  5. Why modern economic growth is so puzzling! • Long persistence of the Malthusian trap • The escape was the IR in the last 200 years • Living standards in Third World countries as low as in most countries pre-1800 (or worse)

  6. Complexity & Simplicity • Explaining growth with a single equation:

  7. Adding human capital

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