Before you read any further, I have a question for you: what, according to you, would be the most important economic event of the 20th century?
There is no right or wrong answer, of course. This exercise is, by definition, subjective in nature, and I’m hoping that there will be many different responses.
Here’s how I would set up my framework to answer this question:
- The event should have affected a significant number of people
- That effect should persist and preferably spread (positively) over time.
- The opportunity cost of that event shouldn’t be too high
- It would be great if positive spillovers from that event could be plausibly identified
Consider, for example, the end of the Cold War. In my view, it ticks almost all of the boxes, with the possible exception of the second, and maybe the third. But it would certainly make my shortlist.
Or what about India’s independence? Again, definitely makes the shortlist, although you could argue that the partition was a very, very high cost to pay.
China moving towards a reform based process? India? The next fifteen years after the second world war, and the slow move away from colonialism and imperialism? The defeat of Japan and Germany in the second world war? Keynes’ magnum opus being published in 1936 (or am I just being a wee bit provocative)?
Chris Blattman points us towards his choice:
We estimate the impact of the Green Revolution in the developing world by exploiting exogenous heterogeneity in the timing and extent of the benefits derived from high-yielding crop varieties (HYVs).https://chrisblattman.com/2022/02/01/the-most-important-economic-event-of-the-past-century/ (Note that the excerpt is from a paper that he has quoted from)
HYVs increased yields of food crops by 44 percent between 1965 and 2010. The total effect on yields is even higher because of substitution towards crops for which HYVs were available, and because of reallocation of land and labor.
Beyond agriculture, our baseline estimates show strong, positive, and robust impacts of the Green Revolution on different measures of economic development. Most striking is the impact on GDP per capita. Our estimates imply that delaying the Green Revolution for ten years would have reduced GDP per capita in 2010 by US$1,273 (PPP adjusted), or 17 percent, across our full sample of countries.
And well, it’s hard to argue against his pick! It gets an endorsement in one of my favorite books of the past decade:
In the 1970s, when I was in high school, about one out of every four people in the world was hungry—“ undernourished,” to use the term preferred by the United Nations. Today, the U.N. says, the figure is one out of ten. 1 In those four decades, the global average life span has risen by more than eleven years, with most of the increase occurring in poor places. Hundreds of millions of people in Asia, Latin America, and Africa have lifted themselves from destitution into something like the middle class. In the annals of humankind, nothing like this surge of well-being has occurred before. It is the signal accomplishment of this generation, and its predecessor.Mann, Charles C.. The Wizard and the Prophet: Two Groundbreaking Scientists and Their Conflicting Visions of the Future of Our Planet (Kindle Locations 63-68). Pan Macmillan. Kindle Edition.
Elsewhere in the book, the author (Charles C. Mann) points us towards a Wall Street Journal editorial that praised Norman Borlaug, the ‘Wizard’ in the book for having saved potentially a billion lives because of the Green Revolution.
But that book also contains a warning about the opportunity costs of this signal achievement:
Vogt, born in 1902, laid out the basic ideas for the modern environmental movement. In particular, he founded what the Hampshire College demographer Betsy Hartmann has called “apocalyptic environmentalism”— the belief that unless humankind drastically reduces consumption its growing numbers and appetite will overwhelm the planet’s ecosystems. In best-selling books and powerful speeches, Vogt argued that affluence is not our greatest achievement but our biggest problem. Our prosperity is temporary, he said, because it is based on taking more from Earth than it can give. If we continue, the unavoidable result will be devastation on a global scale, perhaps including our extinction. Cut back! Cut back! was his mantra. Otherwise everyone will lose!Mann, Charles C.. The Wizard and the Prophet: Two Groundbreaking Scientists and Their Conflicting Visions of the Future of Our Planet (Kindle Locations 89-94). Pan Macmillan. Kindle Edition.
Please do read the book, I cannot recommend it highly enough. One reason I enjoy ed the book as much I did is because it doesn’t take sides, but shows both the pluses and the minuses of the Green Revolution, and that as thoroughly as possible.
But while Mann doesn’t take sides, I do. On balance, it is hard to argue against the Green Revolution having been the most significant economic event of the twentieth century.