DP6444 Cultural Assimilation, Cultural Diffusion and the Origin of the Wealth of Nations URL: http://www.cepr.org/pubs/new-dps/dplist.asp?dpno=6444.asp
Author(s): Quamrul Ashraf, Oded Galor
As late as the end of the 1st millennium CE, the civilizations of Asia were well ahead of Europe in both wealth and knowledge. By the time of the Industrial Revolution in the 18th century, however, Europe had already overtaken these societies. Subsequently, the gap in per capita GDP between the richest and the poorest regions of the world increased from a modest 3 to 1 ratio in 1820 to an astounding 18 to 1 ratio in 2000. While some theories attribute this phenomenon to differences in cultural traits across societies, the authors of CEPR DP6444 argue that the interplay between cultural assimilation and cultural diffusion played a significant role in this Great Divergence.
According to their theory, cultural assimilation (the homogenization of cultural traits within a society) improves the efficiency with which society-specific human capital is transmitted from one generation to the next, increasing productivity achieved with the available production technologies. This is beneficial to a society in the agricultural stage of development. Cultural diffusion (the spread to cultural traits from one society to the other) on the other hand, enhances the accumulation of knowledge and therefore equips a society better to adapt to new technologies. While possibly inhibiting productivity using existing technologies, it stimulates earlier industrialisation and the resulting take-off to a state of sustained economic growth.
The theory is consistent with the contrasting experiences of Islamic societies and Europe. The Golden Age of Islamic civilization was followed by a decline which may be attributed to a resistance of new ideas from the non-Islamic world. Europe, on the other hand, benefited from the knowledge gained from migrant minority groups.
The authors conclude that rather than cultural traits themselves influencing the process of development, it is the contrasting forces of cultural assimilation and diffusion that are instrumental for comparative economic development.