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The Great Divergence: A Network Approach

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  • Ines Lindner
  • Holger Strulik

Abstract

We present a multi-country theory of economic growth in which countries are connected by a network of mutual knowledge exchange. Knowledge in any country depends on the human capital of the countries it exchanges knowledge with. The diffusion of knowledge throughout the world explains a period of increasing world inequality after the take-off of the forerunners of the industrial revolution, followed by decreasing relative inequality. Knowledge diffusion through a Small World network explains the ‘New Kaldor facts’ and produces an extraordinary diversity of country growth performances, including the overtaking of individual countries in the course of world development.

Suggested Citation

  • Ines Lindner & Holger Strulik, 2015. "The Great Divergence: A Network Approach," CESifo Working Paper Series 5638, CESifo.
    • Handle: RePEc:ces:ceswps:_5638
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    Cited by:

    1. Ines Lindner & Holger Strulik, 2020. "Innovation And Inequality In A Small World," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 61(2), pages 683-719, May.
    2. Klaus Prettner & Holger Strulik, 2017. "It's a Sin—Contraceptive Use, Religious Beliefs, and Long-run Economic Development," Review of Development Economics, Wiley Blackwell, vol. 21(3), pages 543-566, August.
    3. Deeken, Tim, 2015. "Knowledge spillovers: On the impact of genetic distance and data revisions," Working Paper Series in Economics 74, Karlsruhe Institute of Technology (KIT), Department of Economics and Management.
    4. Klaus Prettner & Holger Strulik, 2017. "Gender equity and the escape from poverty," Oxford Economic Papers, Oxford University Press, vol. 69(1), pages 55-74.
    5. Matthew Delventhal, 2019. "The Globe as a Network: Geography and the Origins of the World Income Distribution," 2019 Meeting Papers 840, Society for Economic Dynamics.
    6. Esteves, Rui & Geisler Mesevage, Gabriel, 2019. "Social Networks in Economic History: Opportunities and Challenges," Explorations in Economic History, Elsevier, vol. 74(C).

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    More about this item

    Keywords

    networks; knowledge diffusion; economic growth; world income distribution;
    All these keywords.

    JEL classification:

    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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