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

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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/BF00138862

Grossman, G. M., & Krueger, A. B. (1995). Economic Growth and the Environment*. The Quarterly Journal of Economics, 110(2), 353–377. https://doi.org/10.2307/2118443The best tribute that I can make for How the World Became Rich , Mark Koyama and Jared Rubin’s recent addition to the economic history canon, is that I put another book on pause to read it. As a manic completionist, I never do this, but once I had peeked past the blue-girded front cover I couldn’t put it down. Now I’ve read it twice. So it goes.

The book has many notable strengths in its analysis of economic growth, but it also faces several weaknesses and potential criticisms that warrant careful consideration. Firstly, the book could benefit from a more in-depth analysis and exploration of specific topics. While it provides a comprehensive overview of factors contributing to economic growth, a more detailed examination of each factor would enhance the depth of understanding (Prahalad & Ramaswamy, 2004). In extending the examination of wealth, the authors could approach new forms of innovation and cooperation between firms. Firstly, the book comprehensively covers the factors contributing to economic growth. It goes beyond a narrow focus on specific elements. Koyama and Rubin (2022) extensively analyze various factors such as technological advancements, global trade, capitalism, access to natural resources, human capital development, political stability, and financial systems. This comprehensive coverage ensures that readers gain a rounded understanding of the complex dynamics involved in growth economics. The potential gap filled by the work has occurred as the literature frequently focuses on isolated aspects or fails to recognize the interconnectedness of different factors.Fogel, R. W. (2004). The Escape from Hunger and Premature Death, 1700-2100: Europe, America, and the Third World. Cambridge University Press. 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.

Explaining the sustained economic growth that certain parts of the world have experienced since the First Industrial Revolution in the latter half of the eighteenth century has become something of its own field of study in the world of economic history. In fact, according to authors Mark Koyama (George Mason University) and Jared Rubin (Chapman University) it is “the biggest question in the social sciences.”It is especially refreshing to see a book such as this that pays explicit attention to institutions and culture, two themes that until not so long ago were taboo in our field but now seem to play increasingly central roles. The book contains full chapters on each, and while the discussion is naturally far from exhaustive, the authors do an excellent job summarizing some of the best work in these areas. What remains, of course, unsolved is why different nations develop different institutions and how and why such institutions change over time and how exactly cultural beliefs help determine the institutions that society ends up with. Even if you don’t believe that ideas drive the world (I do) and that the great incubator of ideas is universities, you might concede that productivity gains require innovation. An incomplete list of innovations that came from university research (almost always funded by government dollars) includes:

Adam Smith’s An Inquiry into the Wealth and Poverty of Nations (1776) in many ways marked the founding of modern economics.[1] This opus examined the phenomena of growth and industrialization occurring at the time through the institutional analysis of markets, governments, and society. Mark Koyama and Jared Rubin follow in Smith’s footsteps by providing a sweeping review of the economic history literature concerning the rise and spread of modern economic growth in How the World Became Rich (Policy, 2022).[2] In their review, they discuss how geography, institutions, demography, culture, and colonial history affect economic development, and how the interplay between these factors has led some countries to experience tremendous growth while others remain stagnant. This chapter examines the broader trajectory of economic development after the Industrial Revolution. It explores the transition to a modern economic system characterized by industrialization, urbanization, and production and consumption patterns changes. Rubin and Koyama present balanced and fair surveys of made in the literature, but they are reluctant to take strong positions. Such an ecumenical approach sets them apart from Clark’s Farewell to Alms and McCloskey’s Bourgeois Dignity, where the authors take up similar issues but in a much stronger opinionated mode. That thoughtful and measured approach of the survey, its elegant and crystal-clear style, and the authors’ impressive knowledge of a large and complex literature make this book nothing short of ideal for teaching advanced courses on global economic history to economics students.Adopting market-oriented economic systems, notably capitalism, has been instrumental in generating wealth. Capitalism incentivizes competition, innovation, and entrepreneurship, allowing individuals and businesses to pursue their economic interests. Accordingly, capitalism has played a pivotal role in shaping prosperous economies through efficient resource allocation, wealth accumulation, and economic growth.