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  Growth in income per person ca. 1860s (IR ca in England)  Gap between rich and poor economies: 40:1  Income per capita in England:  10-fold ( )  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

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)

Complexity & Simplicity  Explaining growth with a single equation:

Adding human capital