NEW studies of the performance of the world economy over the last millennium further burnish the role of institutions, both formal (parliaments, judiciaries, central banks, social safety nets and schools) and less formal (guilds, trade unions and charities), in its success. It has long been accepted that economic growth and rising living standards are a relatively new phenomenon. Prior to the 18th century, the world economy flatlined; from generation to generation, living standards barely budged. Then from around 1750, output per head suddenly took off and has kept on rising ever since, growing at around 1.5 per cent per year. The miracle of compound interest means that the time that it has taken over this period for living standards to double has been around 50 years vs. around a millennium for the same trick to be pulled off prior to 1700 . This growth take off has coincided with other happy trends: infant mortality rates have almost halved since the end of the 18th century; the estimated human lifespan has doubled. A new study of the entire millennium suggests that while growth up until the mid 18th century did flatline on average, there were significant swings within it. The reason… Read full this story
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