Early Development

37 Pages Posted: 13 Nov 2012

See all articles by Marvin Goodfriend

Marvin Goodfriend

Carnegie Mellon University - David A. Tepper School of Business; National Bureau of Economic Research (NBER)

John McDermott

University of South Carolina - Moore School of Business - Department of Economics

Date Written: January 1, 1994

Abstract

Long-term economic development involves four fundamental processes: the exploitation of increasing returns to specialization, the transition from household to market production, knowledge and human capital accumulation, and industrialization. In this paper, we integrate these processes into a coherent framework for thinking about economic history. Pre-industrial development is driven by increasing returns to specialization made possible by a growing population. Increasing specialization eventually activates a learning technology and initiates industrial growth, which carries the economy to a fully market-based balanced growth path. Among other things, we attribute a role to population and market size that is consistent with the evidence.

Suggested Citation

Goodfriend, Marvin and McDermott, John H., Early Development (January 1, 1994). Federal Reserve Bank of Richmond Working Paper No. 94-2. Available at SSRN: https://ssrn.com/abstract=2123617 or http://dx.doi.org/10.2139/ssrn.2123617

Marvin Goodfriend (Contact Author)

Carnegie Mellon University - David A. Tepper School of Business ( email )

5000 Forbes Avenue
Pittsburgh, PA 15213-3890
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

John H. McDermott

University of South Carolina - Moore School of Business - Department of Economics ( email )

The Francis M. Hipp Building
1705 College Street
Columbia, SC 29208
United States

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