We construct a simple model where political elites may block technological and institutional development, because of a ‘political replacement effect.’ Innovations often erode elites’ incumbency advantage, increasing the likelihood that they will be replaced. Fearing replacement, political...

Interactions between economic development and financial development are studied by looking at the roles of financial institutions in selecting R&D projects (including both imitation and innovation). Financial development is regarded as the evolution of the financing regimes. The effectiveness of...

Lack of access to finance is often cited as a key reason for why poor people remain poor. This Paper uses data on the Indian rural branch expansion programme to provide empirical evidence on this issue. Between 1977 and 1990, the Indian central bank mandated that a commercial bank could open a...

Why are some countries so much richer than others? Development Accounting is a first-pass attempt at organizing the answer around two proximate determinants: factors of production and efficiency. It answers the question ‘how much of the cross-country income variance can be attributed to...

We define a country's technology as a triple of efficiencies: one for unskilled labour, one for skilled labour, and one for capital. We find a negative cross-country correlation between the efficiency of unskilled labour and the efficiencies of skilled labour and capital. We interpret this...

Many observers have declared the ‘New Economy’ to be an Industrial Revolution even more important than the Second Industrial Revolution of 1860-1900, and this Paper raises doubts about this comparison. It shows that the recent acceleration in productivity growth in the US economy can be...

The effects of the quality of institutions on economic development and comparative advantage have been so far investigated separately. This paper proposes a theoretical framework in which trade patterns and growth rates are jointly determined by international differences in contract enforcement...

We construct estimates of educational attainment for a sample of OECD countries using previously unexploited sources. We follow a heuristic approach to obtain plausible time profiles for attainment levels by removing sharp breaks in the data that seem to reflect changes in classification...

This paper builds a model of growth through industrialization, as machines replace workers in a growing number of tasks. This enables the economy to experience long-run growth, as machines become servants of humans, and as their number can grow unboundedly. The mechanism that drives growth is...

This paper analyses the interaction between capital accumulation, technological progress and financial development. Growth is sustained by the development of new varieties of intermediate goods. Innovation is risky and the probability of success depends on entrepreneurs' actions, which can only...