How the World Became Rich. Mark Koyama

How the World Became Rich - Mark Koyama


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      The goal of this book is to bring together the many social scientific theories on the origins of modern, sustained economic growth. This is a big issue with important implications, and unsurprisingly it has been the focus of many great minds. Almost all of these theories focus on one aspect of the origins of growth, such as geography, culture, institutions, colonialism, or demography. By construction, these arguments tend to ignore each other. We hardly fault the authors of the arguments for this. Building and substantiating a theory can take hundreds of pages. Delving into other, far-removed causes of long-run growth can make for a tough read. Most researchers understand this, and they understand the limits of their explanations. Many a successful career has been made by exploring just one aspect of the origins of modern wealth.

      Yet, the emphasis on specific theories of “how the world became rich” has left two gaps in our knowledge. This book hopes to fill these. First, no existing work summarizes all of the advances that have been made by social scientists in the last few decades in a dispassionate, objective fashion. While we do have opinions on what we view as the most convincing hypotheses regarding the origins of sustained economic growth – we have both written on this topic in our own academic work – the goal of this book is not to privilege our preferred theories at the expense of others. The first half of this book simply presents, as objectively as possible, the major hypotheses and debates on the origins of sustained economic growth. If it were not for our book, a reader who wants to get an idea of the current state of the literature would have to read countless books and articles, each putting forth their own hypotheses. This is still a useful exercise, as there is much nuance that we will have to skip over. But presumably most of our readers have lives outside of reading academic tracts. If you want to get an idea of where the debates stand, we’ve done the time-consuming part for you.

      In other cases, institutions may operate through their impact on culture to affect economic growth. For instance, in a study of the long-term developments of trust, Nunn and Wantchekon (2011) find that places in Africa that were more prone to slave raids in the past are less trusting in the present day. It is understandable why people in the past who were subject to slave raids would be mistrusting of others, even neighbors, who may have wanted to enslave them. The fact that a culture of mistrust persists to the present suggests that culture is “sticky,” and thus helps determine long-run economic fortunes.

      Throughout the book, we draw on the most up-to-date social scientific research and data in the context of recent debates among economic historians, development economists, political scientists, and historical sociologists. One important development in the past twenty years is that discussions of the origins of economic growth have gone global. It is no longer sufficient to narrow one’s attention to Great Britain or Western Europe. For instance, one of the biggest debates in the literature is on the origins of the “Great Divergence” between Western Europe and China. The term “Great Divergence” was made famous by Pomeranz (2000), who argued that the divergence between China and the West happened relatively late (after 1750) and was a result of the existence of coal reserves in England and the opening up of the New World, which relieved population pressures and provided new and abundant raw materials. This view has been subject to much debate, with new data suggesting the divergence may have occurred prior to industrialization (Allen, Bassino, Ma, Moll-Murata, and van Zanden, 2011; Brandt, Ma, and Rawski, 2014; Broadberry, Guan, and Li, 2018).

      Figure 1.7 Ruggedness and income in African and non-African countries

      Data sources: Nunn and Puga (2012) for ruggedness, Bolt and van Zanden (2020) for GDP per capita.

      Figure 1.8 The reversal of fortunes within formerly colonized nations, 1500–1995

      Data sources: Acemoglu, Johnson, and Robinson (2002) for urbanization, Bolt and van Zanden (2020) for GDP per capita.

      The first set of explanations that we prefer – both for the onset of industrialization and for modern economic growth – emphasize


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