Working Paper, Brown University, Department of Economics 2006-24
The evolution of economies over most of human history was marked by Malthusian stagnation. vTechnological progress and population growth were miniscule by modern standards and the average growth rate of income per capita was even slower due to the offsetting effect of population growth on the expansion of resources per capita. In the past two centuries, however, the pace of technological progress increased significantly in association with the process of industrialization. Various regions of the world departed from the Malthusian trap and experienced a considerable rise in the growth rates of income per capita and population. The increasing role of human capital in the production process in the second phase of the Industrial Revolution triggered a demographic transition, liberating the gains in productivity from the counterbalancing effects of population growth. The decline in population growth and the associated advancement in technological progress and human capital formation paved the way for the emergence of the modern state of sustained economic growth.