How growth emerged from stagnation: exploring the roots of economic progress
Aug 2025
Enabling world-class research
Hans-Joachim Voth delves into the long-standing question of how humanity transitioned from stagnation to sustained economic growth. Drawing from his research on financial crises, long-term growth, and the history of economic development, Voth explores the key factors that allowed us to break free from millennia of stagnation. He reflects on the broader implications of this shift and the lessons we can apply to today’s economic challenges.
Pressing challenges to address
- What enabled the transition from economic stagnation to sustained growth?
- How do state capacity and institutions shape economic development?
- How do fertility rates, labor productivity, and economic growth interact?
Understanding the challenge of stagnation
Why did humanity escape stagnation after millennia of economic inertia? Why did sustained growth emerge in some regions while others remained trapped in poverty? These questions are at the heart of economic history and define one of the most fundamental puzzles in the field. For most of human existence, economic progress was virtually nonexistent. Advances in technology, improvements in agricultural productivity, and innovations in governance did little to raise living standards in the long run. Any gains were absorbed by population growth, ensuring that per capita income remained stubbornly flat.
This cycle – often referred to as the Malthusian Trap – dominated human history. The key challenge is to understand how and why societies managed to escape it. Economic historians have identified several factors, from institutions that protect property rights to the role of financial markets in capital accumulation. However, there is no consensus on what ultimately triggered the transition from stagnation to sustained growth. Did technological revolutions simply reach a critical mass? Did cultural or political shifts unlock new incentives for investment and innovation? Or was the escape from stagnation largely an accident of history, with no clear replicable pattern?
The stakes are high. Understanding the mechanisms behind economic takeoff is not just about studying the past – it is crucial for the present. Many developing countries remain in conditions eerily similar to those of pre-industrial societies, struggling to achieve long-term prosperity. If we truly understood what caused the historical break from stagnation, we might be better equipped to accelerate growth where it has yet to take hold.
Economic history needs a more comprehensive framework
The biggest challenge in answering these questions lies in the nature of history itself: We have only one observed case of the Industrial Revolution in each country, making traditional empirical analysis difficult. Unlike economists studying modern policy changes, economic historians cannot conduct controlled experiments or rely on repeated observations of the same event. Instead, we must piece together evidence from historical records, using creative methods to extract insights from limited data.
One promising approach is the use of big data in economic history. Advances in digitization allow us to analyze vast amounts of historical information – tax records, legal contracts, trade flows, and more – offering a more granular view of past economic activity. Machine learning and computational modeling are also enabling historians to simulate alternative scenarios, testing hypotheses that were once impossible to verify.
At the same time, theoretical work remains essential. Growth theory must evolve to incorporate the realities of historical development. The current models, often derived from modern macroeconomic analysis, struggle to explain why industrialization took hold in some places but not in others. Economic history needs a more comprehensive framework that integrates political economy, cultural evolution, and financial development. Only by combining rigorous empirical research with theoretical innovation can we begin to unlock the secrets of long-run economic change.
Addressing the defining question of humanity’s development
The question of economic growth is not just an academic curiosity – it is the defining question of humanity’s development. Once you start thinking about it, it becomes impossible to stop. The idea that, for most of history, people lived in conditions virtually indistinguishable from those of their ancestors thousands of years earlier, only for this to change dramatically in the span of a few centuries, is nothing short of astonishing.
This is what makes the study of longrun economic development so fascinating. It forces us to rethink everything we assume about economic progress. What we consider normal today – rising incomes, technological advancement, and improved living standards – is, in historical terms, an anomaly. Understanding why this transformation happened is not just about the past – it is about ensuring that more societies can experience sustained growth in the future.
For me, research is about intellectual curiosity and discovery. There is no roadmap, no fixed set of answers. Every new historical dataset, every new theoretical model, every unexpected piece of evidence forces us to question previous assumptions and refine our understanding. That is what makes economic history so exciting – it is a never-ending search for deeper insights into how the world came to be the way it is.
Bridging the gap between history, finance, and political economy
Economic history was once viewed as a marginal field within economics, but that has changed dramatically in recent years. The recognition that historical analysis is crucial for understanding modern economic dynamics has elevated the discipline.
The UBS Center has attracted top researchers, provided crucial funding for interdisciplinary projects, and created an environment where long-term historical perspectives are integrated into mainstream economic research. It has also facilitated collaboration between economic historians and scholars in other fields, bridging the gap between history, finance, and political economy.
Most importantly, the UBS Center has preserved the intellectual freedom necessary for groundbreaking research. True academic progress does not come from rigidly defined research agendas but from allowing scholars to explore bold ideas and follow unexpected leads. The center’s support has ensured that economic historians in Zurich can tackle big, ambitious questions without being constrained by short-term research trends.
The study of long-run economic growth is far from complete, and major challenges remain. But thanks to institutions like the UBS Center, we are making progress in understanding one of the most profound transformations in human history – and perhaps, in doing so, shaping the economic future of societies still striving to escape stagnation.
Hans-Joachim Voth delves into the long-standing question of how humanity transitioned from stagnation to sustained economic growth. Drawing from his research on financial crises, long-term growth, and the history of economic development, Voth explores the key factors that allowed us to break free from millennia of stagnation. He reflects on the broader implications of this shift and the lessons we can apply to today’s economic challenges.
Pressing challenges to address
- What enabled the transition from economic stagnation to sustained growth?
- How do state capacity and institutions shape economic development?
- How do fertility rates, labor productivity, and economic growth interact?
Understanding the challenge of stagnation
Why did humanity escape stagnation after millennia of economic inertia? Why did sustained growth emerge in some regions while others remained trapped in poverty? These questions are at the heart of economic history and define one of the most fundamental puzzles in the field. For most of human existence, economic progress was virtually nonexistent. Advances in technology, improvements in agricultural productivity, and innovations in governance did little to raise living standards in the long run. Any gains were absorbed by population growth, ensuring that per capita income remained stubbornly flat.
This cycle – often referred to as the Malthusian Trap – dominated human history. The key challenge is to understand how and why societies managed to escape it. Economic historians have identified several factors, from institutions that protect property rights to the role of financial markets in capital accumulation. However, there is no consensus on what ultimately triggered the transition from stagnation to sustained growth. Did technological revolutions simply reach a critical mass? Did cultural or political shifts unlock new incentives for investment and innovation? Or was the escape from stagnation largely an accident of history, with no clear replicable pattern?
Hans-Joachim Voth is the UBS Foundation Professor of Macroeconomics and Financial Markets in the Department of Economics at the University of Zurich.
Quotes
How did the transition from economic stagnation to sustained growth happen? Once you start thinking about it, you can’t stop.
What we consider normal today – rising incomes, technological advancement, and improved living standards – is, in historical terms, an anomaly.
Economic challenges of our time
From rising inequality and global trade tensions to climate change and the impact of artificial intelligence on labor markets – economists today are grappling with fundamental questions that will shape our collective future. In this special edition of the Public Paper series, all affiliated professors of the UBS Center share their perspectives on these challenges. Their contributions highlight how cutting-edge research conducted at the Department of Economics at the University of Zurich can help us better understand – and potentially solve – some of the most urgent issues of our time.
It is precisely this ambition that defines the UBS Center for Economics in Society. Since its founding, the Center has served as a platform for dialogue between academia, business, and policymakers and as a catalyst for excellence in economic research. That vision goes back to Kaspar Villiger. As the founding Chairman of the Foundation Council, he played a pivotal role in establishing and shaping the UBS Center.
With this fifteenth edition of the Public Paper series, we honor Kaspar Villiger’s extraordinary contributions and legacy. By strengthening research capacity at the University of Zurich and fostering public dialogue around key societal questions, his vision continues to inspire the Center’s mission: bridging knowledge and society to build a better future.
From rising inequality and global trade tensions to climate change and the impact of artificial intelligence on labor markets – economists today are grappling with fundamental questions that will shape our collective future. In this special edition of the Public Paper series, all affiliated professors of the UBS Center share their perspectives on these challenges. Their contributions highlight how cutting-edge research conducted at the Department of Economics at the University of Zurich can help us better understand – and potentially solve – some of the most urgent issues of our time.
It is precisely this ambition that defines the UBS Center for Economics in Society. Since its founding, the Center has served as a platform for dialogue between academia, business, and policymakers and as a catalyst for excellence in economic research. That vision goes back to Kaspar Villiger. As the founding Chairman of the Foundation Council, he played a pivotal role in establishing and shaping the UBS Center.
Hans-Joachim Voth on Google Scholarbrowse
Rage against the machines
Author
UBS Foundation Professor of Macroeconomics and Financial Markets, Research Fellow CEPR
Joachim Voth received his PhD from Oxford in 1996. He works on financial crises, long-run growth, as well as on the origins of political extremism. He has examined public debt dynamics and bank lending to the first serial defaulter in history, analysed risk-taking behaviour by lenders as a result of personal shocks, and the investor performance during speculative bubbles. Joachim has also examined the deep historical roots of anti-Semitism, showing that the same cities where pogroms occurred in the Middle Age also persecuted Jews more in the 1930s; he has analyzed the extent to which schooling can create radical racial stereotypes over the long run, and how dense social networks (“social capital”) facilitated the spread of the Nazi party. In his work on long-run growth, he has investigated the effects of fertility restriction, the role of warfare, and the importance of state capacity. Joachim has published more than 80 academic articles and 3 academic books, 5 trade books and more than 50 newspaper columns, op-eds and book reviews. His research has been highlighted in The Economist, the Financial Times, the Wall Street Journal, the Guardian, El Pais, Vanguardia, La Repubblica, the Frankfurter Allgemeine, NZZ, der Standard, der Spiegel, CNN, RTN, Swiss and German TV and radio.
UBS Foundation Professor of Macroeconomics and Financial Markets, Research Fellow CEPR
Joachim Voth received his PhD from Oxford in 1996. He works on financial crises, long-run growth, as well as on the origins of political extremism. He has examined public debt dynamics and bank lending to the first serial defaulter in history, analysed risk-taking behaviour by lenders as a result of personal shocks, and the investor performance during speculative bubbles. Joachim has also examined the deep historical roots of anti-Semitism, showing that the same cities where pogroms occurred in the Middle Age also persecuted Jews more in the 1930s; he has analyzed the extent to which schooling can create radical racial stereotypes over the long run, and how dense social networks (“social capital”) facilitated the spread of the Nazi party. In his work on long-run growth, he has investigated the effects of fertility restriction, the role of warfare, and the importance of state capacity. Joachim has published more than 80 academic articles and 3 academic books, 5 trade books and more than 50 newspaper columns, op-eds and book reviews. His research has been highlighted in The Economist, the Financial Times, the Wall Street Journal, the Guardian, El Pais, Vanguardia, La Repubblica, the Frankfurter Allgemeine, NZZ, der Standard, der Spiegel, CNN, RTN, Swiss and German TV and radio.