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Culture and stages of economic development

Author

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  • Chu, Angus C.
  • Kou, Zonglai
  • Wang, Xilin

Abstract

How do cultural differences in preferences affect economic development? This study develops a simple growth model that features two stages of development. In the first stage, economic growth is driven by human capital accumulation. In the second stage, economic growth is driven by innovation. The economy does not necessarily experience the transition from the first stage to the second stage. If this endogenous transition does not occur, the economy converges to a steady-state level of output. The economy may remain in this middle-income trap under different conditions. Surprisingly, parental preference for education being too strong is among one of them. This result formalizes a potential explanation for why the Industrial Revolution did not happen in China.

Suggested Citation

  • Chu, Angus C. & Kou, Zonglai & Wang, Xilin, 2022. "Culture and stages of economic development," Economics Letters, Elsevier, vol. 210(C).
    • Handle: RePEc:eee:ecolet:v:210:y:2022:i:c:s0165176521004572
    DOI: 10.1016/j.econlet.2021.110213
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    Cited by:

    1. Chu, Angus & Cozzi, Guido & Fan, Haichao, 2022. "Natural Selection and Innovation-Driven Growth," MPRA Paper 113502, University Library of Munich, Germany.
    2. Olayinka Oyekola & Samuel Odewunmi, 2023. "The consequence of societal secrecy for financial constraints," Discussion Papers 2303, University of Exeter, Department of Economics.
    3. Oyekola, Olayinka & Odewunmi, Samuel, 2023. "The consequence of societal secrecy for the financial constraints faced by firms," Economics Letters, Elsevier, vol. 228(C).

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    More about this item

    Keywords

    Culture; Education; Innovation; Economic development; Middle-income trap;
    All these keywords.

    JEL classification:

    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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