Another contributor to the new growth model was Michael Kremer. After graduating from Harvard, Kremer began teaching in Kenya, which got him thinking about economic development. When he returned to the states, he began studying the relationship between technology and population growth. The common belief during that time was that population drove technology and innovation. Kremer decided to further explore this by studying it over a long period of time.
In “Population Growth and Technological Change: One Million B.C. to 1990,” Kremer reported that before the 19th century technology had led to population growth but not necessarily a higher standard of living. At some point, however, increased population led to broader markets, which in turn led to specialization and wealth. His model predicted that the population would ultimately decline because an increase in wealth would lead to “lower fertility around the world.”
A for Mitch.
ReplyDeleteKremer's result is really fascinating, and has been built upon by many others. Basically, he uses Romer's theory to show that the "hockey-stick" shape of a graph of well-being is ... inevitable if the starting population is large enough. If there is a big enough starting population, innovations will accumulate until a small step is made above subsistence. But once that step is made, plowing back some of those gains into innovation leads to more and bigger steps.