An Empirical Investigation of the Unified growth Theory

The Unified Growth Theory is a new theory dealing with macroeconomic development. It combines elements from endogenous, intergenerational and infinite-horizons models, to explain the history of economic development. Can the growth theory be used to classify the stage of economic development of nations? We will try, comparing the developing trends of GDP per capita growth and population growth of 33 nations with the outcome of a baseline simulation. We find that countries can either be classified in the transitional stage, of the Modern Growth Regime. We will also use patent statistics to see if it is a good proxy for the technological progress rate. We find that although it does clarify differences between countries, it shows to be a good proxy for countries with a big manufacturing sector. For countries with a big tertiary sector, it falls short of the intended purpose. To test the validity of the theory, a regression is performed on the countries in the two different stages. The results of these regressions is that, although the predicted influence of population growth on economic growth is present, the relationship isn’t robust when different control variables are added.