Growth and Development in East Asia and the OECD Countries

The industrialization of the world has been an extremely prolonged process of economic growth and development. It is a growth process in the sense that real per capita incomes have been continuously increasing since the start of industrialization, wherever it has occurred. It has also been a development process in the sense that the structure of production and employment has been changing. Relative shares of agriculture, forestry, fishing, hunting and mining have thus been steadily decreasing throughout the process of industrialization. But the process of industrialization can also be seen as a process with a decreasing relative share of manual labor. In the long time perspective the process of economic growth cannot be divorced from a simultaneously changing economic structure. Growth and development cannot be separated from each other as is often implied by standard growth theory. A change in the composition of industrial activity, and in employment, seems to be inseparable from the growth process itself. The theory of balanced growth with constant sectoral proportions is grossly at variance with the way growth has occurred historically, at least within the context of the history of industrial societies. Macroeconomic models of real income growth thus only capture a small part of the real dynamic process. Most of the dynamics of the growth process remains unexplained.