Full-text resources of CEJSH and other databases are now available in the new Library of Science.
Visit https://bibliotekanauki.pl


2017 | 3(17) | 3 | 52-79

Article title

Evidence and the micro-foundations of economic growth



Title variants

Languages of publication



A theory for a phenomenon needs to explain its main empirical features. In the case of modern economic growth, these include the times and places where it has occurred, its magnitude, the distinction between cutting-edge and catch-up growth, and the uniformity of the growth process despite major cultural and institutional heterogeneity. I summarise the historical record to characterise the explanandum, then review the main theoretical perspectives. I find that most leading theories fail to explain the main observed features of modern economic growth. In particular, the magnitude of growth and other key characteristics suggest the need for a systems analysis. An implication is that the economy is driven by interacting economic forces, rather than being merely reactive to external non-economic influences such as preferences and technology.







Physical description


  • Imperial College, Department of Epidemiology & Biostatistics, St Mary’s Campus, Norfolk Place, London W2 1PG, United Kingdom,


  • Acemoglu, D. (2009). Introduction to modern economic growth. Princeton, NJ: Princeton University Press.
  • Acemoglu, D., Johnson, S., & Robinson, J. A. (2005). Institutions as a fundamental cause of long-run growth. In Aghion P., & Durlauf, S. (Eds.) Handbook of Economic Growth. Volume 1, Chapter 6: pages 385-472. Amsterdam: Elsevier North-Holland.
  • Acemoglu, D., & Robinson, J. A. (2012). Why nations fail: the origins of power, prosperity and poverty. London: Profile Books Ltd.
  • Aghion, P., & Howitt, P. (1998). Endogenous growth theory. Cambridge, MA: The MIT Press.
  • Alexandrova. A., & Northcott, R. (2013). It’s just a feeling: why economic models do not explain. Journal of Economic Methodology, 20(3), 262-67.
  • Allen, R. C. (2006). The British industrial revolution in global perspective: how commerce created the industrial revolution and modern economic growth. Oxford University. Available at https://www.nuffield.ox.ac.uk/users/allen/unpublished/econinvent-3.pdf
  • Allen, R. C. (2009). The British industrial revolution in global perspective. Cambridge: Cambridge University Press.
  • Allen, R. C. (2014). The spread of manufacturing. In Neal, L., & Williamson, J. G. The Cambridge history of capitalism, volume II, pp. 32-46.
  • Amsden, A. H. (1989). Asia’s next giant: South Korea and late industrialization. New York, NY: Oxford University Press.
  • Arthur, W. B. (2013). Complexity economics: a different framework for economic thought. SFI Working Paper 2013-04-012. http://www.santafe.edu/media/workingpapers/13-04-012.pdf
  • Austin, G. (2008). The ‘reversal of fortune’ thesis and the compression of history: perspectives from African and comparative economic history. Journal of International Development, 20(8), 996-1027.
  • Barro, R. J., & Sala-i-Martin, X. (2004). Economic growth, 2nd edition. Cambridge, MA: The MIT Press.
  • Bartelsman, E. J, & Doms, M. (2000). Understanding productivity: lessons from longitudinal microdata. Journal of Economic Literature, XXXVIII: 569-94.
  • Baumol, W. J. (2002). The free-market innovation machine. Princeton, NJ: Princeton University Press.
  • Bechtel, W. (2006). Discovering cell mechanisms: the creation of modern biology. Cambridge: Cambridge University Press.
  • Besley, T., & Ghatak, M. (2009). Property rights and economic development. In Rodrik, D., & Rosenzweig, M. R., (Eds.), Handbook of Development Economics, V: 4526-28. New York: Elsevier.
  • Bhidé, A. (2006). How novelty aversion affects financing options, Capitalism and Society, 1(1), 1-31.
  • Blair, M. M. (2003). Locking in capital: what corporate law achieved for business organizers in the nineteenth century. UCLA Law Review, 51, 387-455.
  • Chandler, A.D., Jnr. (1990). Scale and scope: dynamics of industrial capitalism. Cambridge, MA: The Belknap Press of Harvard University Press.
  • Chang, H.-J. (2003). Kicking away the ladder: development strategy in historical perspective. London: Anthem Press.
  • Clark, G. (2005). The condition of the working class in England, 1209-2004. Journal of Political Economy, 113(6), 1307-40.
  • Coase, R. H. (1937). The nature of the firm. Economica, reprinted in Coase, R. H. The Firm, the Market and the Law, 1988. Chicago, IL: University of Chicago Press.
  • Cox, W. M., & Alm, R. (1997). Time well spent: the declining real cost of living in America. Federal Reserve Bank of Dallas. https://docmia.com/d/71346
  • Ebrey, P. B. (1999). The Cambridge Illustrated History of China. Cambridge: Cambridge University Press.
  • The Economist. (2007). China’s next revolution: a new property law is a breakthrough, even though it raises hopes that one-party rule may dash. http://www.economist.com/node/8815075
  • Forrester, J. W. (1970). Counterintuitive behavior of social systems. In: Collected papers of Jay W Forrester: collection, 211-44. Cambridge, MA: Wright-Allen Press.
  • Fouquet, R., & Broadberry, S. (2015). Seven centuries of European economic growth and decline. Journal of Economic Perspectives, 29(4), 227-44.
  • Friedman, M. (1953). The methodology of positive economics, reprinted in Hausman DM. (Ed.). (1994). The philosophy of economics: an anthology, 2nd edition, Cambridge: Cambridge University Press.
  • Gabaix, X. (2009). Power laws in economics and finance. Annual Review of Economics, 1: 255-93.
  • GERA (Global Entrepreneurship Research Association). (2017). Global Entrepreneurship Monitor, Global Report 2016/17. Available for download at http://gemconsortium.org/report
  • Glennan, S. (2002). Rethinking mechanistic explanations. Philosophy of Science, 69, S342-53.
  • Grazzi, M. (2012). Export and firm performance: evidence on productivity and profitability of Italian companies. Journal of Industry, Competition and Trade, 12(4), 413-44.
  • Grüne-Yanoff, T. (2013). Genuineness resolved: a reply to Reiss’ purported paradox. Journal of Economic Methodology, 20(3), 255-61.
  • Hansmann, H., Kraakman, R., & Squire, R. (2006). Law and the rise of the firm. Harvard Law Review, 119, 1335-403.
  • Hart, O., & Moore, J. (1990). Property rights and the nature of the firm. Journal of Political Economy, 98(6), 1119-58.
  • Hodgson, G. M. (2015). Conceptualizing capitalism: institutions, evolution, future. Chicago, IL: Chicago University Press.
  • Hodgson, G., & Gindis, D. (2007). An interview with Oliver Williamson. Journal of Institutional Economics, 3, 373-86.
  • Holt, R. P. F., Rosser, J. B., & Colander, D. (2010). The complexity era in economics. Middlebury College Economics Discussion Paper No. 10-01. http://sandcat.middlebury.edu/econ/repec/mdl/ancoec/1001.pdf
  • Illari, P. M. & Williamson, J. (2012). What is a mechanism? Thinking about mechanisms across the sciences. European Journal for the Philosophy of Science, 2, 119-35.
  • Ireland, P. (2010). Limited liability, shareholder rights and the problem of corporate irresponsibility. Cambridge Journal of Economics, 34(5), 837-56.
  • Janssen, M. (2008). Microfoundations. In Durlauf, S. N. & Blume, L.E. (Eds.), The New Palgrave Dictionary of Economics, 2nd edition. Basingstoke, Hampshire: Palgrave Macmillan.
  • Joffe, M. (2011). The root cause of economic growth under capitalism. Cambridge Journal of Economics, 35, 873-96.
  • Joffe, M. (2013a). The concept of causation in biology. Erkenntnis, 78, 179-97.
  • Joffe, M. (2013b). What causes creative destruction? In Pyka, A., & Andersen, E. S. (Eds.) Long term economic development, pp 431-38. Heidelberg: Springer.
  • Joffe, M. (2014). Can economics be evidence-based? Royal Economic Society Newsletter, http://www.res.org.uk/view/art4aApr14Features.html
  • Joffe, M. (2017). Causal theories, models and evidence in economics – some reflections from the natural sciences. Cogent Economics & Finance http://dx.doi.org/10.1080/23322039.2017.1280983
  • Joffe, M. Submitted a. Causal systems, organization, feedback and mechanisms.
  • Joffe, M. Submitted b. Equilibrium, instability, growth and feedback in economics.
  • Joffe, M. Submitted c. Why does capital flow from poor to rich countries? – the real puzzle.
  • Kelly, M. (1997). The dynamics of Smithian growth. Quarterly Journal of Economics, 112, 939-64.
  • Kirman, A. P. (1992). Whom or what does the representative individual represent? Journal of Economic Perspectives, 6(2), 117-36.
  • Kirman, A. (2011). Complex economics: individual and collective rationality. London: Routledge.
  • Lamoreaux, N. (1985). The great merger movement in American business, 1895-1904. Cambridge: Cambridge University Press.
  • Lane, D. C. (2007). The power of the bond between cause and effect. System Dynamics Review, 23, 95-118.
  • Lindert, P. H. (2004). Growing public: social spending and economic growth since the eighteenth century (2 volumes). Cambridge: Cambridge University Press.
  • Lipsey, R. G., Carlaw, K. I., & Bekar, C. T. (2003). Economic Transformations. Oxford: Oxford University Press.
  • Lucas, R. (1976). Econometric policy evaluation: a critique. In Brunner, K. & Meltzer, A. H. (Eds.), The Phillips curve and labor markets, vol. 1 of the Carnegie-Rochester Conference Series on Public Policy, pp 19-46. Amsterdam: North-Holland Publishing Company.
  • Lucas, R. (1978). Unemployment policy. American Economic Review, 68, 353-57.
  • Lucas, R. E. (1988). On the mechanics of economic development. Journal of Monetary Economics, 22(1), 3-42.
  • Machamer, P., Darden, L., & Craver, C. F. (2000). Thinking about mechanisms. Philosophy of Science, 67, 1-25.
  • Maddison, A. (2006). Western offshoots Australia, New Zealand, Canada and the United States. In The world economy: volume 1: a millennial perspective and volume 2: historical statistics. OECD Publishing, Paris. http://dx.doi.org/10.1787/9789264022621-15-en
  • Maddison, A. (2007). Chinese economic performance in the long run, 2nd edition. Paris: OECD.

Document Type

Publication order reference


YADDA identifier

JavaScript is turned off in your web browser. Turn it on to take full advantage of this site, then refresh the page.