Causes of economic growth: little review of four models.

What we currently have, mainly depends of the economic growth of the past. The difference amongst the life levels is showed through the national income or the Gross National Product per capita.  The level of this magnitude is caused by the past of a country.

What are the causes of the growth?

Mokyr determines a key ingredient (but no essential): the technologic creativity.

As we have seen if the society is under the PFF the life level is lowest than the one we can wait (by that this situation is named inefficiency).

This autor determines that the growth depends of four factors regarding four authors:

• Investment: where the work productivity is directly related to the quality of the tools and the equipments as well as the quantity.  When the capital rythm of increase is bigger than the work force, there is economical growht; this growth is also known as "Robert Solow's growth".

• Expansion of the trading because of the interchange of goods, services and production factors. This is known as "Adam Smith's growth".  The trade determines the work division through the specialization.  The capacity to make specific labours means an increase of productivity.

• Scale economies: if there is a population increase it could be possible to increase the income per habitant where the regions are little.  The increase population allows to this region the speciality and the production increase (North and Thomas).  Besides that some public goods are only available when the population is big.  However the population increase does not mean economic growth, because that increase could lead to greater pressure on food

• Increase of knowledge: technical progress and institutions development.  The previous concepts are regarding the "Schumpeter's growth" where the capital expansion allows a continuos increase of innovation financed by the credits of the banks.

All of this growth models are perfectly compatibles among them.

Cameron R. (1992).  Historia Económica Mundial.  Alianza.  Capítulo 1.

Jones E.L. (1990). El milagro europeo. Alianza. Madrid. Introducción y cap. 12.

Mokyr. J. (1987).  La revolución industrial y la Nueva Historia Económica", "Revista de Historia Económica".  Vol. 2. pp 203-41; vol 3, pp 441-82.

North, D.C.,  y Tomas, R.P. (1989).  El nacimiento del mundo occidental.  Una nueva historia económica (900-1700).  Capítulos 1 y 2.

Technological change: how technology relates to economic change

New inventions, better production techniques than produce more efficiently, better organization and management of firms, better training, better transport and communications all come under the banner of technical progress.

All these things allow a country to increase output.  Progress and investments often go together when old machines are replaced by new, more sophisticated machines that can work faster.

However, is the technological change able to explain the economical change? is it the more importante factor?

Joel Mokyr (1946) states that the technological change is a very important factor but not the decisive one.  The institutional framework is the fundamental factor of technological change through the incentives.

The technological change, according to this author, is any change in the use of the information, regarding to the production, with the end to increase the efficacy.  The consequence of this process is to produce more with less resources or the production of new and better goods (innovation; concept that Mokyr links up with diffusion).

When the institutional framework allows the flow of information, the diffusion is posible.  According to Mokyr the invention is an exogenous factor; if the diffusion exists, the innovation is posible because the invention has been diffused.

Lynn White (1907 - 1987) treats to explain how the stirrup invention is caused by the feudalism.  In many occasions the invention already exists, however there is no application for it, as consequence there is no technological change because there is no diffusion.

http://licn.typepad.com/my_weblog/2012/09/technical-progress-john-dunn-consultant-ambertec-pe-pc.html

During the feudalism because of costs maintenance of the defence, the feudal lords decided to use the stirrup because the cost of horse rider maintenance is lower than a soldier; this is mainly because of the quantity of them to defence the lands, it is needed less horse riders than soldiers.

Bibliography:

Cameron R. (1992).  Historia Económica Mundial.  Alianza.  Capítulo 1.

North, D.C.,  y Tomas, R.P. (1989).  El nacimiento del mundo occidental.  Una nueva historia económica (900-1700).  Capítulos 1 y 2.