The Birth of Economic Development

We well know that our world is divided. That there is 1 billion people living in the high income societies and there is another 1 billion fighting with extreme poverty. Then there is 6 billion that is somewhere in-between. The reasons for these vast differences are complex but history, and especially the era of industrialization plays a crucial role in both explaining and understanding modern conflicts, inequalities and social injustice. Surely the world has not always looked like this. Predominantly agrarian, rural societies in Europe and America used to be equal even though it was the equality of poverty. So when did things become to change? The answer is fairly simple: with the birth of modern economic growth or what is commonly known as Industrial Revolution. 

Let's think about it. Before the industrial revolution people's lives revolved mainly around agriculture. Their well-being, prosperity and sometimes even lives were conditioned by their own work and favor of the season. The world was overwhelmingly rural, both in Africa and in Europe, people trying to grow enough food to survive season by season. With the industrial revolution some countries began to experience a rapid growth in their gross domestic product due to the technological breakthroughs that opened the door for international trade. So why did some countries moved forward and moved fast to become modern high-tech, knowledge and information leaders and some have been left behind, not being able to use this to their own advantage? For that we need to understand the nature of economic growth.

​An interesting part is that modern economic development and industrial revolution are both relatively new phenomena. Humanity has led sedentary agriculture lives for around 10,000 years, pretty much since the neolithic revolution which began around 8000 B.C bringing agriculture and allowing us to be classified as civilized homo sapiens. Humans abandoned their hunting and wandering lifestyles and began to settle in one place, planting fields and raising animals. We can see that from that moment on, to the Industrial Revolution the economic progress was largely linear and the world output very gradual, almost impossible to notice. Now when we look at the period from around 1750  to sometime around 1840 the difference is dramatic.  And this vertical lines continues to rise as the world economy is getting stronger and stronger.

Why did this take off turn up just around that time? There were two factors that acted almost simultaneously: increase in the number of people and an increase in the gross domestic product per capita. The world population was roughly constant - 500,000 billion for around 2,000 years. In bad periods like Black Death this number varied of course but we are talking average. The rapid increase in the world population was due to the changes in economy resulting from a series of innovations that enabled more productivity and less human input. This in turn allowed more people to be supported thanks to the increased food production and improved standard of living.

We already know that the world changed, that it moved from rural to urban and that this process has no end date. We know when in time did this shift happen. Now we need to discover what is hiding behind the Industrial Revolution and what it meant for human history and destiny shaping the world as we see it now. 

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