Galor, Oded. Unified Growth Theory. Princeton, N J: Princeton University Press, 2011. xxii + 325 pages. Cloth, $59.50.
Unified Growth Theory by economist Oded Galor advances a theory of economic growth that accounts for the Malthusian epoch (100,000 BCE-1750), Post-Malthusian regime (1750-1870), and the Modern Growth regime (1870-present). The time periods themselves, however, are less interesting than Galor's findings regarding the causes of economic prosperity and disparity. Underlying the desire to provide a grand theory and account for such vast periods of time is the theme of economic inequality. Why do some countries enjoy a good quality of life while others do not? International inequality, expressed as the ratio of rich to poor, was 3:1 in 1820 but rose to 18:1 by 2000 (p. 2). This book provides a theory and empirical account of factors that contribute to income inequality.
Unified Growth Theory is a parsimonious model of comparative, economic evolution based on four variables: population, technology, education, and national income. The Malthusian epoch is overwhelmingly explained by the positive interaction between population and income, the forces are mutually supporting. The Post-Malthusian regime is characterized by the acceleration of technological progress. The result is an increase in per capita income. Population continues to grow as a factor of income. The Modern Growth regime is fueled by the rapid development of technology, which creates demand for human capital, that is, an educated population. During the Modern Growth regime, Galor explains, parents must make a choice between the "quality" or "quantity" (p. 124) of children they have, a function of budget constraints. The result of this decision is population decline; more educated children rather than, simply, more children. This is a significant demographic shift from past eras in which population grew as well as technology, education, and income rose. The demographic shift, according to Unified Growth Theory, creates the accumulation and sustainment of wealth. However, these factors alone do not explain the current phenomenon of income inequality.
Galor suggests that the current phenomenon of income inequality is a function of cross-country variation in the timing of the demographic shift. Western countries and their offshoots, Galor reports, began to experience population decline as well as sustained economic growth in the early 1800s. Africa, Asia, and Latin...