DP19955 Fighting for Resources: A Unified Growth Model of the Great Divergence
This paper interprets the Great Divergence as the cumulative influence of small asymmetries in technology or various initial conditions, amplified through conflict over resources. It introduces a tractable framework that integrates demography, technological progress, and conflict into a unified growth model. The amplification effect of resource appropriation is characterized by conflict multipliers in both the short- and long-run. Conflict is a source of substantial divergence, as appropriation of resources allows some polities (cities, countries) to develop faster at the expense of others. Reconvergence is, however, possible through population growth, due to strategic complementarities in fertility decisions and staggered demographic transitions. Rich and non-linear dynamics display key features of comparative economic development between the West and the Global South, but also shed light on a variety of historical case studies that share such dynamics of divergence and reconvergence as well as more dramatic episodes of population extinction in a dominated country. Our framework can easily be extended to study the role of resource exhaustion or the fundamental trade-off between trade and conflict.
