Economic Growth and the United States since 1870: A Quantitative Economic Analysis Incorporating Institutional Factors

Abstract

Over the last century or so, there has undoubtedly been convergence of productivity and living standards among the advanced industrialised countries that are usually considered in the debate over the “varieties of capitalism” (Abramovitz 1986; Baumol 1986; Barro and Sala-i-Martin 1995). To understand these varieties using a quantitative economic approach, therefore, requires delving beneath the conventional aggregate economic indicators. This chapter takes a sectoral approach to economic growth, highlighting organisational and institutional differences, which underpin economic performance. Since institutions are slow to change, it is important to consider a long period, and we focus here on the period since 1870, for which reliable data are available. We consider Europe as a whole, which includes a number of countries that have remained relatively backwards as well as the key countries in the varieties of capitalism debate, and we also consider the US as the lead country during the twentieth century.