Conversations on Growth, Stability and Trade
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Conversations on Growth, Stability and Trade

An Historical Perspective

Brian Snowdon

This unique volume provides a comprehensive survey of the major economic issues that have helped shape the modern world. It includes discussions of the latest research findings in macroeconomics and scrutinises some of the most important debates in economic history. The author examines the many controversies relating to the role of government in a modern economy, long-run growth and development, the spread of the Industrial Revolution, the causes and consequences of the ‘Great Depression’, the ‘Great Peacetime Inflation’, the conduct of stabilisation policy, international economic integration and globalisation.
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Chapter 2: Economic Growth and Development: A Very Long-run View

Brian Snowdon


The prevailing world depression, the enormous anomoly of unemployment in a world full of wants, the disasterous mistakes we have made, blind us to what is going on under the surface-to the true interpretation of things . . . the power of compound interest over two hundred years is such as to stagger the imagination. (John Maynard Keynes, 1930) Comparative history cannot finally determine the causes of growth because history ran too few experiments with too many variables, but it is the best control on the confusion . . . we need to look well back and far afield if we are to give a fair account of the history of growth. (Eric Jones, 1988) Since the mid-eighteenth century the defining feature of human history has been the phenomenon of modern economic growth. (Richard Easterlin, 1996) 2.1 WHY IS ECONOMIC GROWTH SO IMPORTANT? Since the middle of the eighteenth century human history has been dominated by the phenomena of modern economic growth. In the eighteenth and nineteenth centuries economic growth had been largely confined to a small number of countries (Maddison, 1982, 1991, 1995a, 1995b, 1997; Bairoch, 1993; Easterlin, 1996). Gradually, ÔmodernÕ economic growth spread from its origins in Great Britain to Western Europe and initially to overseas areas settled by European migrants (Landes, 1969, 1998). The dramatic improvement in living standards that has taken place in the advanced industrial economies since the Industrial Revolution is now spreading to other parts of the world. However this diffusion has been highly uneven and in some cases negligible....

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