For me, the explanation lies in a second “i” – institutions. I will argue that it was the emergence of institutions that explains the rise in the other capitals that were essential pre-conditions for growth (human, social, infrastructural, intellectual etc.) It was the emergence of these same institutions which also cushioned the damaging effects of recessions. As with sight, to gain a true perspective on growth you need two “i"s.  This is, in one sense, not a new story. A number of distinguished economists have, over the years, placed institutions centre-stage in explaining secular trends in social and economic development. They include classical economists such as Adam Smith and John Stuart Mill and, more recently, Nobel Laureates such as Ronald Coase and Douglass North. 21  Broadberry and Wallis themselves conclude that the most likely cause  of fewer downside growth surprises since the Industrial Revolution has been the rise of institutions. 21  Smith (1776), Mill (1848), Coase (1960), North (1991). 7  All speeches are available online at www.bankofengland.co.uk/speeches  7  Empirical work supports the institutional hypothesis. Cross-country growth regressions suggest nations with high-quality institutions out-grow those without. 22  Detailed country case studies reach a similar conclusion. For example, institutional quality has been used to explain the very different economic fortunes of North and South Korea after separation. The absence of institutions is, for some, Why Nations Fail. 23  If institutions hold the key, what exactly do we mean by them and how exactly do they come about?
And the global population scarcely budged, held in check by unchanged food supplies, as th  7  predicted by Thomas Malthus in the late 18 century. Not for nothing was this called the Malthusian era. Another example of this secular stagnation, a favourite of mine, is provided by plotting heights from excavated skeletons records. These are a diagnostic on levels of health and nutrition. Male skeleton heights were essentially unchanged, at 160-170cm, for at least 2,000 years prior to 1750. Humans grew neither physiologically nor financially. And neither, then, did the societies in which they lived. That makes the contrast with developments in the last quarter of the millennium all the more striking. From around 1750, GDP per head suddenly took off and has kept on rising ever since, growing by around 1.5% per year. The magic of compound interest means these growth rates have transformed people’s living standards. The time it takes for living standards to double has shrunk to less than 50 years. The impact on people’s well-being, financial and psychological, has been transformational. It has meant each generation has been around 50% better off than its predecessor. After 1750, generational progress suddenly became visible, children to parents to grandparents. Growth in living standards became a social norm, in a way never previously true in human history. Life’s travellator turned into an escalator. And not just for GDP. Broader metrics of well-being tell a similar tale.