When did the gaps in wealth distribution across the globe significantly widen? What is the role of human capital investment?Was the Industrial Revolution to blame? Or can the roots of economic inequality be traced back even further in human history?
Oded Galor is a professor of economics at Brown University, the founder of the Unified Growth Theory, and author of the book, The Journey of Humanity: The Origins of Wealth and Inequality. His work covers the history of economic development throughout human history, as well as the consequences of that development – vast global inequality.
Oded and Greg discuss the significant historical factors that have shaped wealth distribution across the globe, Oded’s Unified Growth Theory, addressing the long-term impacts of population dynamics, and why diversity is a key but precise ingredient in economic development.
*unSILOed Podcast is produced by University FM.*
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The interplay of institutions, culture, and geography in inequality
30:59: When I view institutions, I view them as a byproduct of the process of development. And this will be true for cultural elements as well. Naturally, at a certain point, there are certain externalities in societies that people cannot fully internalize, and the society is forming some cultural norms that allow individuals to coordinate and act based on cumulative knowledge and cumulative wisdom generated in the course of the history of this group over time. These cultural norms can feed into institutions. Institutions can cause some adaptations in cultural norms. But in terms of the hierarchy of factors, the way that I view the world is that, if we think about inequality today, it is affected by deep-rooted factors, institutions, and culture that are reinforcing one another. But, underlying institutions and culture are geographical elements and human diversity that affecting the nature of the institutions, the nature of cultural characteristics, and their interaction.
Understanding inequality today requires tracing its roots to the past
04:45: In order to understand the rules of inequality today, we have to develop theories that will enable us to link the present and the past. Namely, we have to focus on those initial conditions that created the precondition for economic development and ultimately created much of the inequality we see today.
There is no universal policy that would fit all nations
24:57: One of the main insights of “The Journey of Humanity” is that, in fact, there is no universal policy that would fit all nations. In fact, the design of policy will have to be reflective of the history of each nation, the geography of each nation, and the evolutionary processes that occur there and lead this society into its current position. Once we understand these processes, we can design policies that will foster economic development and basically target societies in a differential way.
The role of diversity in economic development
43:49: Diversity is an incredible force in the context of economic development. Based on our estimates, it accounts for about one-sixth of the variations in inequality across the globe today. And much of the variation in diversity, as we see it across the globe today, was determined very much in the distant past. They were determined due to the exodus of humans from Africa during a time when humans started to populate the planetary assessor.
