Date of Submission


Date of Award


Institute Name (Publisher)

Indian Statistical Institute

Document Type

Doctoral Thesis

Degree Name

Doctor of Philosophy

Subject Name

Quantitative Economics


Economics and Planning Unit (EPU-Delhi)


Das, Satya P. (EPU-Delhi; ISI)

Abstract (Summary of the Work)

It has been recognized that the heart of the development process lies on the transformation of an economy from traditional activities in agriculture to industrial activities. As emphasized by Lewis (1954), the movement of labor from primary sector to industry is conducive to the rise of economy’s savings and investment rate and thus fostering economic growth. The core of this paradigm is the historically observed rapid growth in today’s developed countries associated with expansion of industrial activities.It is well-documented by now that at least over a few centuries leading up to 1800 AD there was little change in the world living standard in terms of per capita wage, income, output or consumption (Hansen and Prescott, 2002 and Tamura, 2002). Not only that, according to Cameron (1993), the living standard in 1850-Britain was about the same as in the Roman empire era. Subsequent centuries have witnessed a remarkable improvement in the standard of living. During 1800-1996 the per-capita real income in Europe has grown at an annual average rate of 1.8% (Tamura, 2002). During the subsequent 120 years, from 1870 to 1990, these averages are 1.9% for the U.S. and 1.4% for the U.K.Such transition of growth regimes along with evolution of international income level has been received with increasing interest by scholars in recent years and a strand of literature is building up to describe an endogenous process underlying these phenomena (Love, 1997; Galor and Weil, 2000; Laitner, 2000; Jones, 2001; Galor and Moav, 2002; Hansen and Prescott, 2002; Tamura, 2002).Among various channels, the key is the transformation of an economy from land based agricultural production mode to industrial activities followed by demographic transition (Hansen and Prescott, 2002 and Tamura, 2002). In agricultural era, land, which is the prime input of production, imposed maximal sustainability condition on the standard of living. Once an economy switches to the modern production technology that uses endogenously growing factors of production, such as physical or human capital, land is no longer important and the economy experiences sustainable growth in income which was not possible earlier given the fixity of land endowment and the growing population.Again when one examines the evolution of world economies more closely, the following observations stand out as significant and interesting. First, England was the first country in the world that experienced the transition to modern growth era. The transition in the English economy took place around the beginning of the nineteenth century when annual productivity growth rose to 1% or more from a rate bellow 1%, prevailing in the eighteenth century (Clark, 2005).Second, in the late nineteenth century, the U.S. economy started catching up with the leader in that era, the United Kingdom, and during 1865-1929 the living standard in the U.S. surged persistently and overtook that of U.K. In 1870, the U.K. per capita GDP was nearly 33% higher than that of the U.S., whereas by 1929, the former had per capita GDP that was 33% lower than that of the latter (Parente and Prescott, 2005).


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