Lecture 7 - The Cultural Factor Flashcards
Resolution of the Mystery of Growth
Identifies the origins of growth in the past 200 years, after hundreds of thousands of
years of stagnation, and the forces that triggered the stagnation to growth
Contribution to the understanding of the Mystery of Inequality
Variations in the timing of the take-off contributed to the divergence in income per capita in the past two centuries → deep-rooted geographical, cultural, and institutional characteristics
new function for evolution of tech. progress
gt+1i = g(et, Lt, Ωti)
with Ωti = characteristics affecting tech progress in country i
What are other factors affecting technological progress
- cultural traits
- institutional characteristics
- geography and climate
new function for evolution of education
et+1i = e(gt+1; Ψti)
with some country-specific characterisitics Ψti
Definition
What are instituitons
Humanly devised constraints that structure human interaction. They are made up of formal constraints (rules, laws) and informal constraints (norms of behaviour, conventions or self imposed codes of conducts- essentially culture)
Today we have complusory schooling so it doesnt matter how much people value human capital or education -whether your parents are quality type or quantity type doesnt matter because you have school
Definition
Culture
Preferences, social norms, and ideological attitudes which depend upon the capacity for learning and transmitting knowledge to succeeding generations and peers
More common now than before for your preferences to be influenced by things around you compared to just your parents
Horizontal learning from peers and teachers as well as vertical learning from parents and intergenerational transmission
What incentives does culture shape
incentives to trust strangers, engage with trade, cooperate on a large scale
What are cultural traits and what can they do
highly persistent but can also change rapidly
This social transmission occurs through learning, imitation, education and taboo, meaning that cultural characteristics may evolve far more rapidly than our genome does
Why do culture and institutions need to evolve together
- Culture and institutions evolve together- it is hard for instituions to impact without cultural changes
- Rapid cultural changes are unlikely to have an effect unless is it accompanied by institutional change
- Seeing that some country is succeeding because it has some particular set of norms does not mean that those norms are good for any economy it depends on the context of the economy or country
- However forced cultural change can result in a backlash or an effect that was not anticipated
What are some positive correlation patterns
- patience correlates more with GDP
- Higher trust, higher investment, higher GDP per capita
Culture and the transition from stagnation to growth
Can culture explain the European take-off
Mokyr’s arguments
- propositional knowlegde: naturual laws/ science
- prescriptive knowlegde: techniques and instructions
together the interaction of these useful knowledge eventually led to major technological innovations and generate economic growth
- A belief in the possibility and desirability of human progress
- A belief that knowledge is actually supposed to be used (that is, applied to
production), which set a new agenda for scientific research and is instrumental in
bringing about progress
Can culture explain the European take-off
Enlightenment
The Enlightenment called on human beings to trust themselves and have the resolution to reject antiquated cultural traditions. It encouraged the development of a more sceptical, empirical and flexible approach towards the world, in the hope of creating a new culture founded not on a faith in the traditions of the past but on the belief that a better world could be built through scientific, technological and institutional progress.
- in other socities cultural norms did not value individual freedom as much as in Dutch republic or Britain - those people promoted economic growth
- liberty became more important to elites
- Europe had the best of all possible worlds between political fragmentation and
intellectual unification. It was diverse and pluralistic, yet it was intellectually
“integrated” in that there was a more or less unified market for ideas
Culture and the transition from stagnation to growth
Protestant Reformation
Max Weber Hypothesis
Becker and Woessmann (2009) find a strong positive relationship
between Protestantism and school enrollment in 19th c. Prussia - Protestant regions of Germany were richer than Catholic regions
because they learnt how to read the bible they learnt how to read and write as well - wasn’t with the intention to increase human capital accumulation it was just the culture
Culture and the transition from stagnation to growth
Catholic Church
undermined kin ties by forbidding marriages between cousins
this fostered greater individualism, less conformity (which is good for economic growth as you would want to differ from your peers incentivising innovation) in Malthusian Epoch
Delayed transition form stagnation to growth because of its effects on fertility
Cultural change and economic development
What did the demographic transition mark
The escape from Malthusian stagnation:
the moment where technological progress, higher economic growth does not lead to higher fertility but instead leads to lower fertility and higher education
Cultural change and economic development
The cultural origins of the demographic transition
France
Blanc (2023) argues that backlash against religious authorities holding monopoly on faith and against absolutist,
divine-right monarchy that granted a monopoly on faith to the Catholic Church during
the Counter Reformation caused France to secularize first. This in turn left to a decline in fertility.
Although they lost their political power Franec was able to grow as fast as England because France increased (Y/L) because of limiting the increase of L whereas in England and Wales Y increased because technological progress however wasn’t growing as much because of high fertility levels and Malthusian Trap
The cultural origins of the demographic transition - how did culture change people’s attitudes
- Culture has shaped the degree of trust we have in each other as well as in political and financial institutions, fostering social capital and cooperation.
- It has formed our inclination towards future-oriented behaviour, affecting saving, human capital formation and technological adoption, and it has affected the way we have perceived transformative ideas and paradigm shifts
Why does culture matter for economic development
culture made people embrace the growth-enhancing values of individualism and secularism: a belief that the individual should have the right to shape their own destiny, without social or even religious constraints.
These cultural transformations were also instrumental in establishing political and economic institutions that were conducive to further technological progress. And as the pace of technological and social change intensified, these new cultural norms and institutional structures became even more advantageous.
Barriers to the diffusion of development
divergent historical paths led to cultural barriers between them, the greater the barriers, the more difficult it is for innovations, institutions and behaviours to spread
Example to barriers to the diffusion of development
if you were linguistically close to france you will face less barriers to the spread of the fertility declines, the spread of innovation during time of demographic transition
Why do some cultural traits persist or change rapidly
- When a shift in cultural characteristics has led to economic success, that change seems to have taken place more quickly. But since on the whole cultures evolve more slowly than technology, especially in the past few centuries, it is likely that in some societies cultural traits have been and may still be a barrier to development
Summary of Cultural traits
Emergence
cultural traits emerge from myriad factors, predominantly as an adaptive response to our habitat.
Adjustments in that environment, whether in the form of new institutions, technology, the arrival of new crops, trade or migration, have had a major impact on the emergence and endurance of new cultural traits.
