How the World Became Rich: The Historical Origins of Economic Growth

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Using real-world examples in “How the World Became Rich” helps readers connect theory to practice. However, the depth and breadth of examples can vary across the literature. For example, some books may provide extensive case studies and empirical evidence, while others rely more on theoretical constructs and historical anecdotes. Nevertheless, using relevant and relatable examples strengthens the practicality of this book by Koyama and Rubin (2022). For instance, by examining the changes in demography, Koyama and Rubin (2022, p. 177) show how “Malthus turned out to be wrong” by noting examples such as how “he did not fully anticipate the extent to which married couples would seek to limit their number of children”. For example, Koyama and Rubin (2022) have recognized that economic growth is influenced by social, political, and environmental factors alongside economic considerations. This integration provides a more nuanced understanding of the complexities of wealth and its spatial implications (Purvis & Grainger, 2013). Geography students, in particular, will appreciate the book’s multidimensional approach, allowing them to explore the interactions between economic processes and the physical and human landscapes. Koyama and Rubin (2022) go beyond purely economic factors and delves into wealth inequality, political stability, and sustainability. This broader perspective aligns with the interests and concerns of students studying social sciences, including geography, as it allows them to critically analyze the impacts of economic growth on societies and the Environment. As Koyama and Rubin (2022, p. 173) demonstrate, while “Macaulay’s assessment was certainly rose tinted”, unlike Malthus, this economic intellectual “envisioned the consequences of sustained economic growth”. Furthermore, the book may not give sufficient attention to the implications of wealth inequality. Wealth disparities have significant socio-political consequences, and a more thorough examination of their impact on society and the economy would provide a more comprehensive analysis. Unfortunately, some authors would approach this topic from an aspect of envy (Piketty, 2017, 2021), while others approach differences in income as a negative outcome without explaining why (Harrington, 2016). Personally, I would prefer to see greater inequity than fewer people in poverty. Others take a different approach (Sowell, 1995). The preferred explanation of Koyama and Rubin for how the world became rich is institutions. Institutions enable a stable foundation for the technological progress that drives the productivity gains on which economic growth depends. When the authors of How the World Became Rich talk about institutions, they speak broadly of the systems of government, law, political economy, education and market structures in which economic life is embedded.

Christensen, C. M., Baumann, H., Ruggles, R., & Sadtler, T. M. (2006). Disruptive innovation for social change. Harvard Business Review, 84(12), 94.

Chesbrough, H. W. (2003). Open Innovation: The New Imperative for Creating and Profiting from Technology. Harvard Business Press.

Global trade and commerce have served as vital drivers of wealth creation. For example, establishing maritime trade routes and later advancements in air travel have facilitated the exchange of goods, services, and ideas across continents. In addition, globalization has enabled countries to specialize in industries with a comparative advantage, fostering economic interdependence and growth. Given how wealthy some parts of the world have become, it can be tempting to look for a simple or monocausal explanation for how the world became rich in hopes of coming up with easy solutions to global poverty. International organizations like the World Bank and the International Monetary Fund (IMF) have tried to lift nations out of poverty by offering cheap access to capital, encouraging the development of better institutions, and supplying education. These attempts at poverty alleviation have brought mixed success. The graph below shows GDP per capita (in constant 2011 dollars) from 1000 to 2018 for China, the U.S. and Western Europe. The book’s comprehensive coverage ensures that readers understand economic growth holistically, exploring various factors contributing to wealth creation. The clear explanations make complex economic concepts accessible, enhancing readers’ understanding of the subject matter. Integrating multiple viewpoints adds depth and nuance to the analysis, recognizing the interconnectedness of economic growth with social, political, and environmental factors. Using real-world examples makes the material relatable and practical, fostering a deeper understanding. The book’s consideration of historical context and long-term trends enhances our comprehension of the dynamics of economic growth over time. The accessibility of the book allows a broad audience, including students and professionals from various fields, to engage with the material. Additionally, the book’s recognition of social and environmental implications provides a more comprehensive analysis of economic growth. Alberti, M., Marzluff, J. M., Shulenberger, E., Bradley, G., Ryan, C., & Zumbrunnen, C. (2003). Integrating Humans into Ecology: Opportunities and Challenges for Studying Urban Ecosystems. BioScience, 53(12), 1169–1179. https://doi.org/10.1641/0006-3568(2003)053[1169:IHIEOA]2.0.CO;2

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Economic history scholars, it seems, are obsessed with writing about "how the world became rich". Perhaps because these books always seem to find an audience, whether NGO wonks or Wall St. types. As far as these types of books go this one is mercifully short and comprehensively researched even if it never seems to find an "answer". Of course "finding" the answer would leave the authors open to the sin of disprovability thereby pulling the curtain away from the Wizard of Economics. Given the complex and mysterious nature of modern economic growth, one of the best ways to understand it is to walk through the history of how and why it began, where and when it began, and how modern economic growth began to spread around the globe. Koyama and Rubin invite their readers on this journey by working through the history of why Britain was the source of modern economic growth, why other places lagged behind, and how modern economic growth spread around the world. Supporting the cotton argument is Richard Allen’s influential thesis that Britain’s relatively high labor costs combined with their relatively low costs of capital and energy (namely coal) “induced innovation” in textiles that spread to other industries and drove the Industrial Revolution. The authors provide a list of captious critiques to Allen’s explanation, none of which I found particularly compelling. Furthermore, the book effectively employs real-world examples and case studies to illustrate the concepts and theories discussed. The book enhances readers’ ability to apply economic principles to real-life contexts by relating the material to practical situations. Using concrete examples helps make the content more engaging and relatable, enabling readers to grasp the relevance and significance of the discussed topics. Incorporating real-world examples enhances the book’s effectiveness in fostering a deeper understanding of economic growth.

Fogel, R. W. (2004). The Escape from Hunger and Premature Death, 1700-2100: Europe, America, and the Third World. Cambridge University Press. Alesina, A., Özler, S., Roubini, N., & Swagel, P. (1996). Political instability and economic growth. Journal of Economic Growth, 1(2), 189–211. https://doi.org/10.1007/BF00138862Britain first benefited from European geography. The rugged geography of Europe prevented a single state from dominating the European continent, which in turn led to Europe being persistently politically fragmented. Political fragmentation allowed for more political diversity and greater separation of sovereignty between secular rulers, religious leaders, and the nobility. The book has two parts. The first is a literature review of the five main strands of research in modern economic history—what I, following Bisin and Federico (2021), usually call the New Historical Economics. The second is also a literature review, but in the guise of a “rise of the west”-type book, and covers the medieval preconditions for European growth, Britain’s takeoff, and the spread of the Industrial Revolution to the global periphery. I will discuss each of these elements separately, focusing more on the second, which is the substance of the argument, and organize some of my thoughts from reading. The book stands out for its comprehensive coverage, thoroughly examining the factors driving economic growth. It goes beyond a narrow focus on specific elements and provides a holistic understanding of the complex dynamics involved in wealth creation. Exploring various factors and their interconnections offers readers a comprehensive overview of the drivers behind economic growth. When read with other works by Rubin (2017), the clarity of why cultures advance or decline becomes substantially more transparent. Importantly, in this other work by Rubin (2017, p. 11), radicalism is examined, with the author noting that “[t]he best way to contain it – indeed, the best way to contain radicalism of any kind – is through economic development. Radical ideas, be they religious or secular, are much more appealing when there is little hope for a better future”. McCloskey, Deirdre. 2010. Bourgeois Dignity: Why Economics Can’t Explain the Modern World. Chicago: University of Chicago Press. The book delves into various factors such as technological advancements, global trade, capitalism, access to natural resources, human capital development, political stability, and financial systems. This coverage ensures that students gain a holistic understanding of the complex dynamics involved in wealth creation. Moreover, by exploring these factors in depth, the book equips economics students with a solid foundation of knowledge essential for their studies. A student studying a combination of economics and geography would need a multidisciplinary approach to understand the interplay between those two fields (Marzluff et al., 2008). This will enable them to understand how economic systems impact the Environment and how geographic factors change economic outcomes (Alberti et al., 2003).