Working Paper: CEPR ID: DP6022
Authors: Oded Galor; Stelios Michalopoulos
Abstract: This research suggests that the evolution of entrepreneurial spirit played a significant role in the process of economic development and the evolution of inequality within and across societies. The study argues that entrepreneurial spirit evolved non-monotonically in the course of human history. In early stages of development, the rise in income generated an evolutionary advantage to entrepreneurial, growth promoting traits and their increased representation accelerated the pace of technological advancements and the process of economic development. Natural selection therefore had magnified growth promoting activities in relatively wealthier economies as well as within the upper segments of societies, enlarging the income gap within as well as across societies. In mature stages of development, however, non-entrepreneurial individuals gained an evolutionary advantage, diminishing the growth potential of advanced economies and contributing to the convergence of the intermediate level economies to the advanced ones.
Keywords: evolution; growth; natural selection; risk aversion; technological progress
JEL Codes: J11; J13; O11; O14; O33; O40
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| risk-tolerant entrepreneurial traits (L26) | accelerated technological advancements (O39) |
| accelerated technological advancements (O39) | economic development (O29) |
| risk-tolerant entrepreneurial traits (L26) | economic development (O29) |
| natural selection (C52) | growth-promoting activities in wealthier economies (O49) |
| growth-promoting activities in wealthier economies (O49) | income inequality (D31) |
| non-entrepreneurial individuals (L26) | diminished growth potential (I15) |
| diminished growth potential (I15) | convergence among intermediate economies (F29) |
| risk aversion (D81) | child-rearing in early stages of development (J13) |
| income level (D31) | evolutionary advantage of risk-tolerant individuals (D81) |
| higher risk aversion (D81) | advantageous in more advanced stages (Y50) |