Unified Growth Theory Contradicted by the Absence of Takeoffs in the Gross Domestic Product

📝 Abstract

Data describing historical economic growth are analysed. They demonstrate convincingly that the takeoffs from stagnation to growth, claimed in the Unified Growth Theory, never happened. This theory is again contradicted by data, which were used, but never properly analysed, during its formulation. The absence of the claimed takeoffs demonstrates also that the postulate of the differential takeoffs is contradicted by data.

💡 Analysis

Data describing historical economic growth are analysed. They demonstrate convincingly that the takeoffs from stagnation to growth, claimed in the Unified Growth Theory, never happened. This theory is again contradicted by data, which were used, but never properly analysed, during its formulation. The absence of the claimed takeoffs demonstrates also that the postulate of the differential takeoffs is contradicted by data.

📄 Content

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Unified Growth Theory Contradicted by the Absence of Takeoffs in the Gross Domestic Product
Ron W Nielsen1 Environmental Futures Research Institute, Gold Coast Campus, Griffith University, Qld, 4222, Australia January, 2016 Data describing historical economic growth are analysed. They demonstrate convincingly that the takeoffs from stagnation to growth, claimed in the Unified Growth Theory, never happened. This theory is again contradicted by data, which were used, but never properly analysed, during its formulation. The absence of the claimed takeoffs demonstrates also that the postulate of the differential takeoffs is contradicted by data.

Introduction In our earlier study (Nielsen, 2015a) we have presented mathematical analysis of the historical Gross Domestic Product (GDP). Now, we shall focus our attention on the alleged takeoffs from stagnation to growth, postulated in the Unified Growth Theory (Galor, 2005a, 2008a, 2011, 2012a) and on the associated claim of the differential takeoffs, i.e. on the claim that takeoffs happened at distinctly different time for developed and less-developed regions. “The take-off of developed regions from the Malthusian Regime was associated with the Industrial Revolution and occurred at the beginning of the 19th century, whereas the take-off of less developed regions occurred towards the beginning of the 20th century and was delayed in some countries well into the 20th century” (Galor, 2005a, p. 185). We shall demonstrate that the postulated takeoffs never happened and consequently that the concept of the differential takeoffs is contradicted by data.
The data we are using (Maddison, 2010) are virtually the same (Maddison, 2001) as used by Galor during the formulation of his Unified Growth Theory. The difference between the two compilations is that the new set of data was extended to the 21st century. The extended data are not essential for testing the Unified Growth Theory but they indicate more clearly the continuing transitions to slower trajectories, the process which commenced towards the end of the 20th century.
Galor had access to Maddison’s data but he has never analysed them. His interpretations of the mechanism of economic growth are based on strongly questionable quotations of isolated numbers, on the unfortunate simplistic and self-misleading examination of data and on the habitual use of grossly distorted diagrams (Ashraf, 2009; Galor, 2005a, 2005b, 2007, 2008a, 2008b, 2008c, 2010, 2011, 2012a, 2012b, 2012c; Galor and Moav, 2002; Snowdon & Galor, 2008).

1 AKA Jan Nurzynski, r.nielsen@griffith.edu.au; ronwnielsen@gmail.com; http://home.iprimus.com.au/nielsens/ronnielsen.html Suggested citation: Nielsen, R. W. (2016). Unified Growth Theory Contradicted by the Absence of Takeoffs in the Gross Domestic Product. http://arxiv.org/ftp/arxiv/papers/1601/1601.04686.pdf

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Earlier study (Nielsen, 2014) indicated that historical economic growth can be described using hyperbolic distributions in much the same way as the growth of human population (von Foerster, Mora & Amiot, 1960). More recently (Nielsen, 2015a), we have demonstrated that the same description is applicable also to the regional economies.
Unlike the better-known exponential growth, which is easier to understand, hyperbolic distributions are strongly deceptive because they appear to be made of two distinctly different components, slow and fast, joined perhaps by a certain transition component. This illusion is so strong that even the most experienced researchers can be easily deceived particularly if their research is based on a limited body of data, as it was in the past. Fortunately, Maddison’s data solve this problem, and fortunately also their analysis is trivially simple because, as pointed out earlier (Nielsen, 2014), hyperbolic distributions can be easily identified and analysed using the reciprocal values of data. Consequently, if in the past, researchers were basing their conclusions on the strongly-limited sets of data and imagined that there was a prolonged epoch of stagnation followed by a sudden takeoff, now there is no excuse to continue with such interpretation of the historical economic growth because we have excellent sets of data, which lead to entirely different interpretations. It is, therefore surprising, if not disappointing, that Galor, who had access to these excellent data and even used them during the formulation of his theory, did not analyse them properly but followed the traditional and incorrect interpretations of the historical economic growth.
Theories play an important role in scientific research because they crystallise interpretations of studied phenomena. However, theories have to be always tested by data. In science it is important to look for data confirming theoretical explanations but it is even more important to discover contradicting

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