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Introduction to Modern Economic Growth set of beliefs that have evolved over time and outside the direct control of individuals.1 Even though institutions might be hard to change in practice, culture is much harder to influence, and any advice to a society that it should change its culture is almost vacuous In the rest of this chapter, we will discuss each of these four explanations in greater detail We will explain what the reasoning for these different hypotheses are and provide a brief overview of the empirical evidence pertaining to various fundamental causes of economic growth The theoretical underpinnings and implications of the institutions view will be further developed in Part of the book At this point, the reader should be warned that the author of this book is not an objective outside observer in this debate, but a strong proponent of the institutions hypothesis Therefore, not surprisingly, this chapter will conclude that the institutional differences are at the root of the important proximate causes that we have already listed Nevertheless, the same evidence can be interpreted in different ways and the reader should feel free to draw his or her own conclusions Before delving into a discussion of the fundamental causes, one other topic deserves a brief discussion This is where we start in the next section 4.2 Economies of Scale, Population, Technology and World Growth As we have emphasized in Chapter 1, cross-country income differences result from the differential growth experiences of countries over the past two centuries This makes it important for us to understand the process of economic growth Equally remarkable is the fact that world economic growth is, by and large, a phenomenon of the past 200 years or so Thus another major question concerns why economic growth started so recently and why there was little economic growth before The growth literature has provided a variety of interesting answers to this question Many of them focus on the role of economies of scale and population The argument goes as follows: in the presence of economies of scale (or increasing returns to scale), population needs to have reached a certain critical level so that technological 1A major and important exception to this is the effect of education on the beliefs and values of individuals 160