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The spirit of capitalism and long-run growth

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Author Info
Heng-fu Zou

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Abstract

Why do different countries have different long-term savings and growth rates? Why is the productivity rate not the same around the world? Recent new theories of endogenous growth have tried to answer these questions by replacing the usual assumption of diminishing returns in production. The author offers an alternative: he introduces"the spirit of capitalism"into the model. In the long run, countries with different degrees of capitalist spirit will have different consumption, capital stock, and endogenous growth rates. In his model, inflation is no longer superneutral in relation to long-run growth. The author provides a formal model that is supported by many empirical and historical studies on cultural attributes and economic development. His model helps explain: (a) why Japan and four East Asian countries, South Korea, Taiwan, Hong Kong and Singapore have succeeded; (b) why nations that had an established Protestant religion in 1870 had a per capita income in 1979 that was more than a third higher than in Catholic nations; and (c) why British industry has declined since 1850.

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Publisher Info
Paper provided by The World Bank in its series Policy Research Working Paper Series with number 630.

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Date of creation: 31 Mar 1991
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Handle: RePEc:wbk:wbrwps:630

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Related research
Keywords: Economic Theory&Research; Economic Growth; Inequality; Achieving Shared Growth; Economic Conditions and Volatility;

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Barro, Robert J, 1990. "Government Spending in a Simple Model of Endogenous Growth," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages S103-26, October. [Downloadable!] (restricted)
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  2. De Long, J Bradford, 1988. "Productivity Growth, Convergence, and Welfare: Comment," American Economic Review, American Economic Association, vol. 78(5), pages 1138-54, December. [Downloadable!] (restricted)
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  3. Tjalling C. Koopmans, 1963. "On the Concept of Optimal Economic Growth," Cowles Foundation Discussion Papers 163, Cowles Foundation, Yale University. [Downloadable!]
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Heng-fu Zou, 1998. "The spirit of capitalism, social status, money, and accumulation," Journal of Economics, Springer, vol. 68(3), pages 219-233, October. [Downloadable!] (restricted)
  2. Eric R. Young, 2004. "The Wealth Distribution and the Demand for Status," Macroeconomics 0410008, EconWPA. [Downloadable!]
    Other versions:
  3. Jang-Ting Guo & Juin-Jen Chang, 2008. "Social Status and Optimal Income Taxation," Working Papers 200814, University of California at Riverside, Department of Economics, revised Dec 2008. [Downloadable!]
  4. Kei Hosoya, 2002. "Non-separable utility, wealth effects, and economic growth in a monetary economy," Economics Bulletin, Economics Bulletin, vol. 15(10), pages 1-7. [Downloadable!]
  5. Hung-Ju Chen & Jang-Ting Guo, 2009. "Money and Endogenous Growth in a Cash-in-Advance Model with Social Status," Working Papers 200906, University of California at Riverside, Department of Economics, revised Jun 2009. [Downloadable!]
  6. Johanna Francis, 2008. "Wealth and the Capitalist Spirit," Fordham Economics Discussion Paper Series dp2008-10, Fordham University, Department of Economics. [Downloadable!]
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  7. Nicholas Barberis & Ming Huang & Tano Santos, 1999. "Prospect Theory and Asset Prices," NBER Working Papers 7220, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  8. Qiang Zhang, 2006. "The Spirit of Capitalism and Asset Pricing: an Empirical Investigation," CIRJE F-Series CIRJE-F-428, CIRJE, Faculty of Economics, University of Tokyo. [Downloadable!]
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  9. Christopher D. Carroll, 2000. "Portfolios of the Rich," NBER Working Papers 7826, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  10. Ryu-ichiro Murota & Yoshiyasu Ono, 2008. "Growth, Stagnation and Status Preference," ISER Discussion Paper 0715, Institute of Social and Economic Research, Osaka University. [Downloadable!]
  11. Christopher D Carroll, 1997. "Why Do the Rich Save So Much?," Economics Working Paper Archive 388, The Johns Hopkins University,Department of Economics. [Downloadable!]
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  12. Fisher, Walter H. & Hof, Franz X., 2001. "Status Seeking in the Small Open Economy," Economics Series 106, Institute for Advanced Studies. [Downloadable!]
    Other versions:
  13. Danyang Xie, 2002. "Explicit Transitional Dynamics in Growth Models," GE, Growth, Math methods 0207003, EconWPA. [Downloadable!]
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