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Nguyen Thang DAO, 2012. "Toward a Uni ed Growth Theory"
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| Abstract: |
| This paper developes a uni ed growth model capturing issues of endogenous economic
growth, fertility, infant mortality, technological progress, education and environmental qual-
ity to interpret the evolution of history from Malthusian stagnation regime, through the
demographic transition to modern growth. The production structure in this paper allows to
explain the so-called Environmental Kurznet Curve theoretically. The model suggests that
in the very early stage of development characterized by small population, low education and
low technological level, the economy is trapped in a low stable steady state with very low
growth rate of technological progress, zero-education and hence low suriving probability of
infant which makes the population growth very small. In this stagnation the technologi-
cal progress makes the pollution more polluted. In the period of demographic transition,
corresponding to the industrial revolution time in Western Europe when there is a sharp
increase in technological level, the infant mortality rate increases due to the pollution and
hence the fertility also increases due to maximizing utility behavior of households. The
infant mortality and fertility rates start decreasing when the level of technology exceeds
a threshold (normalized by 1) in which technology has positive effect on environmental
quality. The growth rate of technological progress plays an crucial role in demographic
transition. Investment in education increases along with the increase in growth of tech-
nological progress because education get more return via supplying human capital in the
future. The more investment in education for children, the less number of children the
houselds raise because of the budget contraints of household. This trade-off along with the
growth of technological progress make the fertility rate decreasing, then the economy enters
a Modern Growth regime with reduced population and sustained growth rate of income. |
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