Economic Growth Theories: A Literature Review (original) (raw)
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Economic Growth: A Literature Review La croissance économique : Une revue de la littérature
Economic growth is a fundamental concept in economics that describes the long-term expansion of a country's production of goods and services. Economic progress can be measured using other indicators such as per capita income, employment, or human development indicators. However, she is generally measured by the PIB increase. Consequently, for several centuries, researchers have placed a premium on economic growth. Several authors have developed theories of economic growth over time. Smith, Ricardo, Malthus, Marx, Schumpeter, Keynes, Harrod, Domar, Solow, Romer, Lucas, and Barro are examples. As a result, our post will address the following issue: What are the various economic growth theories? The goal of this article is to provide a synopsis of the literature on economic growth theories in order to address this issue. Alternatively, through a synthesized literature review. These theories are classified into two types: traditional theories and growth endogenous theories. The first are as follows: classical theories, Schumpeter theories, Keynes theories, post-Keynesian theories, and neoclassical theories. As a result, these new growth theories feature a wide range of growth sources, including human capital and technological innovation, physical capital and public capital.
Old And New Theories Of Economic Growth (Ii Part)
Montenegrin Journal of Economics, 2006
In this article an attempt has been made to give comparative analysis of old and new theory of economic growth. The field of economic growth has became again very dynamic and very interesting after appearance of seminal Romer's 1986 and Lucas's 1988 articles, which initiated so called new theory of economic growth, sometime termed as theory of endogenous technological progress. This new theory, in some very important issues, stands in a sharp contrast with the old neoclassical version of theory of economic growth, which similarly can be termed as the theory of exogenous technological progress Apart from the introduction and the concluding section, core of the article is presented in four sections. In first of them exposition of old version of neoclassical growth theory is given. In the following 3 sections survey of new theory is given. Version that eliminates assumption of diminishing returns to capital is discussed first. Than, version that uses human capital as engine of growth is presented. After that, models that use R&D as engine of growth is discussed. Models with spillovers from international trade are also shortly presented.
This article sets out to review Lewis 1955 without making any concession to its age. It examines the fit of Lewis' analysis with the early growth model of Harrod-Domar and the later exogenous technological progress Solow-Swan model and endogenous model approaches. We find Lewis' analysis builds on and is consistent with these approaches. His analysis is different to the usual mechanistic growth analyses and less susceptible to the usual assessment of growth theory that, "its link with public policy is often very remote. It is as if a poor man collected money for his food and blew it all on alcohol" (Sen 1970, pp. 9-10).
Towards a new synthesis of economic growth theory
The topic of economic growth is the subject of this excellent book published by Richard Arena and Pier Luigi Porta, professors at the Universities of Nice-Sophia Antipolis (France) and Milano-Bicocca (Italy) respectively. It is not treated however in a simple way, as the editors have compiled writings of important representatives of Keynesian Schools (and Post Keynesian) of Cambridge as; William Baumol, Geoffrey Harcourt and Luigi Pasinetti as well as authors framed in the neoclassical tradition of growth theory such as the Nobel Prize Robert Solow, thus describing the field of an ever-growing economic theory. The comparative analysis of the theories based on the Solow's neoclassical growth model along with those based on the structural dynamics of Luigi Pasinetti, make a strong analytical frame that combines the best analytical tools of economics, with economic history, and the history of economic thought. The contrast between the two analytical frameworks, starting from their own methodological intentions, reaches the points of convergence between the two settings and what would be the modern theory of economic growth. The latter is understood in three main stages of theoretical development. The first is linked to the search of optimal growth models of neoclassical or "Solovian" tradition; the second phase is characterized by the breakdown of the assumption of diminishing returns to capital and the staging of endogenous growth models, to conclude with the stage marked by the inclusion of structural dynamics in the growth models. This last stage is mainly characterized by a breakdown with those " balanced " growth models from the "Solovian" framework, and the occurrence of the demand relevance, sectorial imbalances, innovation, human learning and the resulting imbalance between economic sectors as engines and drivers of growth. In this stage is where the work and influence of Luigi Pasinetti is suited, commonly known as the contribution of last century 50s and 60s Keynesian Cambridge School to the debate on economic growth. Without putting into perspective the three stages of theoretical development of modern economic growth outlined above, it is very difficult to understand the new models that have emerged with the introduction of technology and structural change
Selected Theories of Economic Growth
The chapter in Book carry out a vertical or in-depth analysis of the three main schools of thought; classical, neo-classical and endogenous (new growth theory). The horizontal analysis of a wide range of issues connected with growth theory are also reviewed, including competition, technical change, growth inclusiveness and vintage capital. The stages (evolutionary / revolutionary) and sectoral impact approaches to economic growth are also presented. After working through this chapter, you will understand the: • Definitions of economic growth and economic development • Distinguishing features between economic growth and development • Harrod-Domar growth model • The Neoclassical growth theory o Solow and Solow-Swan Neoclassical model • The New Growth Theories o Lucas Endogenous Growth Theory o Romer’s Model of Technological Change • Historical Stages of Growth Theories o Rostow’ Stages growth theory o Karl Marx’s Historical Materialism • Sectoral Drivers Growth Theories o Kaldor-Verdoorn's Law o Thirlwall's Export Constrained Growth Law • Vintage Theory • Inclusive Growth Model • Dependency Model Chapter in Anthology of Theories and Their Applications in Social & Management Sciences, ed. Nwachukwu, Ogundiwin and Nwaobia, Lagos: Jamiro Press Link, 63-92.
Old and new growth theories: a unifying structure?
This paper discusses some of the recent theoretical developments in growth theory, tying them to the earlier growth theories. We do this by setting out a basic generic model and show how it yields two of the key models that have played a prominent role in the recent literature on economic growth theory, the endogenous growth model and the non-scale growth model. We focus initially on the former, emphasizing how the simplest such model leads to an equilibrium in which the economy is always on its balanced growth path. We have also show how the endogeneity or otherwise of the labor supply is important in determining the equilibrium growth rate and the responsiveness of the equilibrium growth rate to macroeconomic policy. But transitional dynamics are an important aspect of the growth process we discuss alternative ways that they may be introduced. Within the endogenous growth framework this occurs naturally through the introduction of a second capital stock and two such examples are considered. The first is the introduction of government capital in the one sector model, and the second is the twosector production model, in which the two capital goods relate to physical and human capital. Criticisms of the endogenous growth model have led to the development of the non-scale model. This is always characterized by transitional dynamics that are more flexible than those of the corresponding endogenous growth model. The model is closer in structure to the traditional neoclassical model, which in fact is an early example. Sorting through the growth literature over the last half century, one sees striking parallels between the old and the new. The structures have many similarities; it is the methods of analysis that are changing. The AK technology of the basic one-sector endogenous growth model is identical to that of the Harrod-Domar model. Furthermore, the equilibrium rate of growth in the AK model can be expressed as the product of the savings rate and the output capital ratio, and is identical to Harrod's warranted growth rate. Moroever, the rigidities that were associated with the Harrod-Domar technology, and led to the development of the Solow-Swan neoclassical model, have their parallels in the more recent literature.
BILKENT UNIVERSITY Department of Economics Econ 453 Theories of Growth and Development I Fall 2001
I will deal mainly with the new growth theory and development macroeconomics in this course. We will be mostly concerned with the determinants of the wealth of nations and also the appropriate national policies to achieve sustained and stable growth. We will regard the economic machine being in motion towards its long run (steady state) equilibrium, in all its giant complexity with many interrelated markets and different agents, classes and institutions. Four sets of issues will be addressed: we will,