From Growth Spurts to Sustained Growth: The Nature of Growth and Unified Growth Theory
The recent literature on unified growth theory has shed new light on the transition to sustained economic growth. Nevertheless, unified growth theory has not devoted a lot of attention to the nature of economic growth and its impact in the transition from Malthus to Solow. This research presents new evidence on the existence of pre-industrial growth spurts and provides new foundations concerning the nature of economic growth during the Malthus to Solow transition. Following previous research in unified growth theory, sustained economic growth arises due to complementarities between the triple engines of growth of technological development, human capital and the organization of the workplace. In this research, growth spurts are an intrinsic feature of the economy, but throughout history their effect on standards of living is mostly temporary. The rise in living standards only becomes sustained when the complementarity of the triple engines of growth emerges. In Malthusian economies, most technologies were basic and only require straightforward knowledge or human capital, and thus the skill-technology complementarity did not play a role in their development. As a consequence, most technological developments in Malthusian economies generated growth spurts that did not become sustained, although there was a temporary increase in standards of living. However, the increasing complexity of the epistemic knowledge base reported by the historical literature meant that investments in applied technology were progressively more significant, enhancing the role of human capital. After a certain threshold of the knowledge base was surpassed, more and more complex applied technologies were developed, and growth spurts became permanent features of the economy. This research thus captures some of the most important historical features concerning the nature of growth in the transition to sustained economic growth.
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