The spirit of capitalism and long-run growth
AbstractWhy 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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Bibliographic InfoPaper provided by The World Bank in its series Policy Research Working Paper Series with number 630.
Date of creation: 31 Mar 1991
Date of revision:
Economic Theory&Research; Economic Growth; Inequality; Achieving Shared Growth; Economic Conditions and Volatility;
Other versions of this item:
- O10 - Economic Development, Technological Change, and Growth - - Economic Development - - - General
- O40 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
- B10 - Schools of Economic Thought and Methodology - - History of Economic Thought through 1925 - - - General
- B20 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - General
- P10 - Economic Systems - - Capitalist Systems - - - General
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"'The spirit of capitalism' and long-run growth,"
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- Heng-fu Zou, 1991. "The spirit of capitalism and long-run growth," Policy Research Working Paper Series 630, The World Bank.
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