Galor, Oded. Unified Growth Theory.
|Article Type:||Book review|
|Subject:||Books (Book reviews)|
|Publication:||Name: International Social Science Review Publisher: Pi Gamma Mu Audience: Academic Format: Magazine/Journal Subject: Social sciences Copyright: COPYRIGHT 2012 Pi Gamma Mu ISSN: 0278-2308|
|Issue:||Date: Spring-Summer, 2012 Source Volume: 87 Source Issue: 1-2|
|Topic:||NamedWork: Unified Growth Theory (Nonfiction work)|
|Persons:||Reviewee: Galor, Oded|
Galor, Oded. Unified Growth Theory. Princeton, N J: Princeton
University Press, 2011. xxii + 325 pages. Cloth, $59.50.
Unified Growth Theory by economist Oded Galor advances a theory of economic growth that accounts for the Malthusian epoch (100,000 BCE-1750), Post-Malthusian regime (1750-1870), and the Modern Growth regime (1870-present). The time periods themselves, however, are less interesting than Galor's findings regarding the causes of economic prosperity and disparity. Underlying the desire to provide a grand theory and account for such vast periods of time is the theme of economic inequality. Why do some countries enjoy a good quality of life while others do not? International inequality, expressed as the ratio of rich to poor, was 3:1 in 1820 but rose to 18:1 by 2000 (p. 2). This book provides a theory and empirical account of factors that contribute to income inequality.
Unified Growth Theory is a parsimonious model of comparative, economic evolution based on four variables: population, technology, education, and national income. The Malthusian epoch is overwhelmingly explained by the positive interaction between population and income, the forces are mutually supporting. The Post-Malthusian regime is characterized by the acceleration of technological progress. The result is an increase in per capita income. Population continues to grow as a factor of income. The Modern Growth regime is fueled by the rapid development of technology, which creates demand for human capital, that is, an educated population. During the Modern Growth regime, Galor explains, parents must make a choice between the "quality" or "quantity" (p. 124) of children they have, a function of budget constraints. The result of this decision is population decline; more educated children rather than, simply, more children. This is a significant demographic shift from past eras in which population grew as well as technology, education, and income rose. The demographic shift, according to Unified Growth Theory, creates the accumulation and sustainment of wealth. However, these factors alone do not explain the current phenomenon of income inequality.
Galor suggests that the current phenomenon of income inequality is a function of cross-country variation in the timing of the demographic shift. Western countries and their offshoots, Galor reports, began to experience population decline as well as sustained economic growth in the early 1800s. Africa, Asia, and Latin America, however, have not fully realized this demographic shift, and, as a consequence, experienced income inequality. The key factor to explain variation in the timing of the democratic shift is education, the point in time in which parents, as rational economic actors, begin to make the choice to have fewer children at the expense of better educating those they do have. Galor suggests that variant county-wide policies toward education have either supported or discouraged this tradeoff. However, rather than providing contextual discussion of such polices, the author attributes those policies, exclusively, to historical, geo-biographical conditions in each country. Essentially, Galor contends that natural selection created environments that explain country-wide policies toward education and therefore the variance in economic growth.
The contour of this book may be unfamiliar to some sociologists; Unified Growth Theory is a grand theory and aggregate empirical data and models of rational economic actors are used to support the central propositions. Nevertheless, Galor's findings are painstakingly historical as well as contemporary. Unified Growth Theory not only characterizes each era but provides an explanation of the transitions from one era to the next as well as an explanation for current, comparative, empirical data to support findings.
Another notable element of Unified Growth Theory for sociological consideration is the distinct role of education in telling the story of economic history. In contrast to neoclassical growth and endogenous growth model, Galor finds education, more so than technology, to be the most significant factor in economic expansion. He does not discuss the policy relevance of this finding; however, implicitly, his conclusions suggest policies that promote the education of children more so than policies that promote innovation. For example, capital investment in research and/or protection of intellectual property are necessary for economic growth as well as to hasten income inequality. Education for economic development, while part of the United States policy lexicon, is not often fully embraced or financially supported. Despite this, Galor provides a mass of data and theory that may help to frame the role of education in creating economic sustainability.
Josephine Gatti, Ph.D. Candidate
Assistant Professor of Public Administration
Texas A&M University-Corpus Christi
Corpus Christi, Texas
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