Written by Ryan McGuine //
Before inquiring into the causes of development phenomena observed, it is a good idea to first establish just what phenomena are observed. Toward those ends, Nicholas Kaldor presented a set of six stylized facts in 1961 designed to summarize what had been learned about economics in the 20th century and establish a research agenda framework. Following the same line of reasoning in the 21st century, Charles Jones and Paul Romer presented another set of six facts in 2009 — dubbed the “New Kaldor Facts.” These state that:
- Increased flows of goods, ideas, finance, and people — via both globalization and urbanization — have increased the extent of the market for all workers and consumers.
- For most of history, growth in both population and GDP per capita were nearly zero, but have accelerated during the last century to the relatively rapid rates observed today.
- The variation in cross-country rate of growth of GDP per capita increases with increasing distance from the world technological frontier (the highest level of technological advancement possible).
- Differences in measured inputs explain less than half of the enormous cross-country differences in GDP per capita. The rest can be explained by productivity differences.
- Human capital per worker (education, vocational skills, etc.) is rising dramatically throughout the world.
- The rising quantity of human capital relative to unskilled labor has not been matched by a sustained decline in skilled workers’ wages.