IDEAS home Printed from https://ideas.repec.org/p/nad/wpaper/20180021.html
   My bibliography  Save this paper

Social Interactions and Modern Economic Growth

Author

Listed:
  • Javier Mejia

    () (Division of Social Science)

Abstract

This paper offers a theoretical framework to understand the coevolution of social interactions and long-term economic growth. It begins by considering that most traditional societies did not have educational markets. Thus, access to the required knowledge for transiting to a modern economy had to be transmitted through social interactions, in particular, through the interaction between heterogeneous groups of people–i.e. distant interactions. Once immersed in a modern economy, the productive system should have increased the demand for knowledge, promoting more distant interactions. Simultaneously, the emergence of distant interactions should have affected the connectivity of society, reducing its heterogeneity, making cheaper posterior interactions but reducing their profitability. Moreover, social interactions competed and benefited from other non-market activities, child rearing specifically. The model arrives at four basic predictions. First, modern economic growth brings a more cohesive society. Second, modern economic growth brings long-term reductions in fertility with potential short-term increases. Third, initial barriers to social interactions could explain the timing of modern economic growth arrival. Fourth, the timing of modern economic growth arrival could explain current output levels. I exploit different data sources to offer evidence in support of these predictions.

Suggested Citation

  • Javier Mejia, 2018. "Social Interactions and Modern Economic Growth," Working Papers 20180021, New York University Abu Dhabi, Department of Social Science, revised Sep 2018.
  • Handle: RePEc:nad:wpaper:20180021
    as

    Download full text from publisher

    File URL: https://nyuad.nyu.edu/content/dam/nyuad/academics/divisions/social-science/working-papers/2018/0021.pdf
    File Function: First version, 2018
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    as
    1. David de la Croix & Matthias Doepke & Joel Mokyr, 2018. "Clans, Guilds, and Markets: Apprenticeship Institutions and Growth in the Preindustrial Economy," The Quarterly Journal of Economics, Oxford University Press, vol. 133(1), pages 1-70.
    2. Alessandra Fogli & Laura Veldkamp, 2012. "Germs, Social Networks and Growth," NBER Working Papers 18470, National Bureau of Economic Research, Inc.
    3. John A. James & David F. Weiman, 2010. "From Drafts to Checks: The Evolution of Correspondent Banking Networks and the Formation of the Modern U.S. Payments System, 1850-1914," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 42(2-3), pages 237-265, March.
    4. Oded Galor, 2012. "The demographic transition: causes and consequences," Cliometrica, Journal of Historical Economics and Econometric History, Association Française de Cliométrie (AFC), vol. 6(1), pages 1-28, January.
    5. Linus Dahlander & Lars Frederiksen, 2012. "The Core and Cosmopolitans: A Relational View of Innovation in User Communities," Organization Science, INFORMS, vol. 23(4), pages 988-1007, August.
    6. Lindner, Ines & Strulik, Holger, 2014. "From tradition to modernity: Economic growth in a small world," Journal of Development Economics, Elsevier, vol. 109(C), pages 17-29.
    7. Buera, Francisco J. & Oberfield, Ezra, 2015. "The Global Diffusion of Ideas," Working Paper Series WP-2016-13, Federal Reserve Bank of Chicago.
    8. Louis Putterman & David N. Weil, 2010. "Post-1500 Population Flows and The Long-Run Determinants of Economic Growth and Inequality," The Quarterly Journal of Economics, Oxford University Press, vol. 125(4), pages 1627-1682.
    9. Ager, Philipp & Brückner, Markus, 2013. "Cultural diversity and economic growth: Evidence from the US during the age of mass migration," European Economic Review, Elsevier, vol. 64(C), pages 76-97.
    10. Greif, Avner, 1993. "Contract Enforceability and Economic Institutions in Early Trade: the Maghribi Traders' Coalition," American Economic Review, American Economic Association, vol. 83(3), pages 525-548, June.
    11. Fernando E. Alvarez & Francisco J. Buera & Robert E. Lucas, Jr., 2013. "Idea Flows, Economic Growth, and Trade," NBER Working Papers 19667, National Bureau of Economic Research, Inc.
    12. Oded Galor, 2011. "Unified Growth Theory," Economics Books, Princeton University Press, edition 1, number 9477.
    13. Joerg Baten & Jan Zanden, 2008. "Book production and the onset of modern economic growth," Journal of Economic Growth, Springer, vol. 13(3), pages 217-235, September.
    14. Jeremy Greenwood & Ananth Seshadri & Guillaume Vandenbroucke, 2005. "The Baby Boom and Baby Bust," American Economic Review, American Economic Association, vol. 95(1), pages 183-207, March.
    15. Greif, Avner, 1989. "Reputation and Coalitions in Medieval Trade: Evidence on the Maghribi Traders," The Journal of Economic History, Cambridge University Press, vol. 49(04), pages 857-882, December.
    16. Walter Bossert & Conchita D'Ambrosio & Eliana La Ferrara, 2011. "A Generalized Index of Fractionalization," Economica, London School of Economics and Political Science, vol. 78(312), pages 723-750, October.
    17. Galor, Oded, 2007. "Multiple growth regimes - Insights from unified growth theory," Journal of Macroeconomics, Elsevier, vol. 29(3), pages 470-475, September.
    18. repec:wly:japmet:v:33:y:2018:i:5:p:748-762 is not listed on IDEAS
    19. Desmet, Klaus & Ortuño-Ortín, Ignacio & Wacziarg, Romain, 2012. "The political economy of linguistic cleavages," Journal of Development Economics, Elsevier, vol. 97(2), pages 322-338.
    20. William Easterly & Ross Levine, 1997. "Africa's Growth Tragedy: Policies and Ethnic Divisions," The Quarterly Journal of Economics, Oxford University Press, vol. 112(4), pages 1203-1250.
    21. Agustín Bénétrix & Kevin O’Rourke & Jeffrey Williamson, 2015. "The Spread of Manufacturing to the Poor Periphery 1870–2007," Open Economies Review, Springer, vol. 26(1), pages 1-37, February.
    22. Mara P. Squicciarini & Nico Voigtländer, 2015. "Human Capital and Industrialization: Evidence from the Age of Enlightenment," The Quarterly Journal of Economics, Oxford University Press, vol. 130(4), pages 1825-1883.
    23. Miguel Lopez-Morell & Jose O'Kean, 2008. "A stable network as a source of entrepreneurial opportunities: The Rothschilds in Spain, 1835-1931," Business History, Taylor & Francis Journals, vol. 50(2), pages 163-184.
    24. Mokyr, Joel, 2005. "The Intellectual Origins of Modern Economic Growth," The Journal of Economic History, Cambridge University Press, vol. 65(02), pages 285-351, June.
    25. Marc P. B. Klemp, 2012. "Prices, wages and fertility in pre-industrial England," Cliometrica, Journal of Historical Economics and Econometric History, Association Française de Cliométrie (AFC), vol. 6(1), pages 63-77, January.
    26. Jonathon N. Cummings, 2004. "Work Groups, Structural Diversity, and Knowledge Sharing in a Global Organization," Management Science, INFORMS, vol. 50(3), pages 352-364, March.
    27. Boyan Jovanovic & Rafael Rob, 1989. "The Growth and Diffusion of Knowledge," Review of Economic Studies, Oxford University Press, vol. 56(4), pages 569-582.
    28. Ajay Mehra & Andrea L. Dixon & Daniel J. Brass & Bruce Robertson, 2006. "The Social Network Ties of Group Leaders: Implications for Group Performance and Leader Reputation," Organization Science, INFORMS, vol. 17(1), pages 64-79, February.
    29. David N. Weil & Oded Galor, 1999. "From Malthusian Stagnation to Modern Growth," American Economic Review, American Economic Association, vol. 89(2), pages 150-154, May.
    30. Alberto Alesina & Eliana La Ferrara, 2003. "Ethnic Diversity and Economic Performance," Harvard Institute of Economic Research Working Papers 2028, Harvard - Institute of Economic Research.
    31. Gilsing, Victor & Nooteboom, Bart & Vanhaverbeke, Wim & Duysters, Geert & van den Oord, Ad, 2008. "Network embeddedness and the exploration of novel technologies: Technological distance, betweenness centrality and density," Research Policy, Elsevier, vol. 37(10), pages 1717-1731, December.
    32. Galor, Oded, 2005. "From Stagnation to Growth: Unified Growth Theory," Handbook of Economic Growth,in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 4, pages 171-293 Elsevier.
    33. Gino Cattani & Simone Ferriani, 2008. "A Core/Periphery Perspective on Individual Creative Performance: Social Networks and Cinematic Achievements in the Hollywood Film Industry," Organization Science, INFORMS, vol. 19(6), pages 824-844, December.
    34. Daron Acemoglu & Simon Johnson & James A. Robinson, 2002. "Reversal of Fortune: Geography and Institutions in the Making of the Modern World Income Distribution," The Quarterly Journal of Economics, Oxford University Press, vol. 117(4), pages 1231-1294.
    35. Marc P. B. Klemp, 2012. "Erratum to: Prices, wages and fertility in pre-industrial England," Cliometrica, Journal of Historical Economics and Econometric History, Association Française de Cliométrie (AFC), vol. 6(2), pages 221-221, May.
    36. Gøsta Esping-Andersen & Francesco C. Billari, 2015. "Re-theorizing Family Demographics," Population and Development Review, The Population Council, Inc., vol. 41(1), pages 1-31, March.
    37. Timothy W. Guinnane, 2011. "The Historical Fertility Transition: A Guide for Economists," Journal of Economic Literature, American Economic Association, vol. 49(3), pages 589-614, September.
    38. Niels Møller & Paul Sharp, 2014. "Malthus in cointegration space: evidence of a post-Malthusian pre-industrial England," Journal of Economic Growth, Springer, vol. 19(1), pages 105-140, March.
    39. Oded Galor, 2011. "Unified Growth Theory and Comparative Development," Rivista di Politica Economica, SIPI Spa, issue 2, pages 9-21, April-Jun.
    40. William Easterly, 2006. "Reliving the 1950s: the big push, poverty traps, and takeoffs in economic development," Journal of Economic Growth, Springer, vol. 11(4), pages 289-318, December.
    41. Hong, Lu & Page, Scott E., 2001. "Problem Solving by Heterogeneous Agents," Journal of Economic Theory, Elsevier, vol. 97(1), pages 123-163, March.
    42. Oded Galor & Andrew Mountford, 2008. "Trading Population for Productivity: Theory and Evidence," Review of Economic Studies, Oxford University Press, vol. 75(4), pages 1143-1179.
    43. Klaus Desmet & Ignacio Ortuño-Ortín & Shlomo Weber, 2009. "Linguistic Diversity and Redistribution," Journal of the European Economic Association, MIT Press, vol. 7(6), pages 1291-1318, December.
    44. Enrico Spolaore & Romain Wacziarg, 2018. "Ancestry and development: New evidence," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 33(5), pages 748-762, August.
    45. Valerio Sterzi & Stefanie Stantcheva & Santiago Caicedo & Ernest Miguelez & Ufuk Akcigit, 2016. "Dancing with the Stars: Interactions and Human Capital Accumulation," 2016 Meeting Papers 1037, Society for Economic Dynamics.
    46. Maria Carmela Schisani & Francesca Caiazzo, 2016. "Networks of power and networks of capital: evidence from a peripheral area of the first globalisation. The energy sector in Naples: from gas to electricity (1862-1919)," Business History, Taylor & Francis Journals, vol. 58(2), pages 207-243, March.
    47. Ray E. Reagans & Ezra W. Zuckerman, 2008. "Why knowledge does not equal power: the network redundancy trade-off," Industrial and Corporate Change, Oxford University Press, vol. 17(5), pages 903-944, October.
    48. Fearon, James D, 2003. "Ethnic and Cultural Diversity by Country," Journal of Economic Growth, Springer, vol. 8(2), pages 195-222, June.
    49. Gurneeta Vasudeva & Akbar Zaheer & Exequiel Hernandez, 2013. "The Embeddedness of Networks: Institutions, Structural Holes, and Innovativeness in the Fuel Cell Industry," Organization Science, INFORMS, vol. 24(3), pages 645-663, June.
    50. Gregory Clark, 2005. "Human Capital, Fertility, and the Industrial Revolution," Journal of the European Economic Association, MIT Press, vol. 3(2-3), pages 505-515, 04/05.
    51. Javier Mejia, 2018. "Social Networks and Entrepreneurship. Evidence from a Historical Episode of Industrialization," Working Papers 20180020, New York University Abu Dhabi, Department of Social Science, revised Sep 2018.
    52. Francisco Buera, 2014. "The Global Diffusion of Ideas," 2014 Meeting Papers 1099, Society for Economic Dynamics.
    Full references (including those not matched with items on IDEAS)

    More about this item

    JEL classification:

    • D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation
    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:nad:wpaper:20180021. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Kim Nguyen). General contact details of provider: http://edirc.repec.org/data/ecnyuae.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.