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Institutional Rigidities and Economic Growth


  • Hodgson, Geoff


This paper involves a critical discussion of Nicholas Kaldor's contribution to the theory of economic growth, and the associated Verdoorn Law. As well as Kaldor's theory, prominent rival theories, such as the diffusion hypothesis of S. Gomulka and the neo-Marxist model proposed by S. Bowles et al., are found wanting. An alternative approach is developed based on the nature and role of institutions in modern economies, and their function in encapsulating or transmitting both codifiable and noncodifiable knowledge. Confirmation of this "institutional" theory of economic growth is provided by an econometric test using cross-section OECD data. Copyright 1989 by Oxford University Press.

Suggested Citation

  • Hodgson, Geoff, 1989. "Institutional Rigidities and Economic Growth," Cambridge Journal of Economics, Oxford University Press, vol. 13(1), pages 79-101, March.
  • Handle: RePEc:oup:cambje:v:13:y:1989:i:1:p:79-101

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    References listed on IDEAS

    1. Malerba, Franco, 2002. "Sectoral systems of innovation and production," Research Policy, Elsevier, vol. 31(2), pages 247-264, February.
    2. Frederic S. Lee, 2002. "Theory creation and the methodological foundation of Post Keynesian economics," Cambridge Journal of Economics, Oxford University Press, vol. 26(6), pages 789-804, November.
    3. Freeman, Chris & Louca, Francisco, 2002. "As Time Goes By: From the Industrial Revolutions to the Information Revolution," OUP Catalogue, Oxford University Press, number 9780199251056, June.
    4. Richard R. Nelson & Sidney G. Winter, 2002. "Evolutionary Theorizing in Economics," Journal of Economic Perspectives, American Economic Association, vol. 16(2), pages 23-46, Spring.
    5. Fagerberg, Jan, 1987. "A technology gap approach to why growth rates differ," Research Policy, Elsevier, vol. 16(2-4), pages 87-99, August.
    6. Dosi, Giovanni, 1993. "Technological paradigms and technological trajectories : A suggested interpretation of the determinants and directions of technical change," Research Policy, Elsevier, vol. 22(2), pages 102-103, April.
    7. Geoffrey M. Hodgson, 1998. "The Approach of Institutional Economics," Journal of Economic Literature, American Economic Association, vol. 36(1), pages 166-192, March.
    8. Peter Nielsen, 2002. "Reflections on critical realism in political economy," Cambridge Journal of Economics, Oxford University Press, vol. 26(6), pages 727-738, November.
    9. Peter, Fabienne, 2001. "Rhetoric vs Realism in Economic Methodology: A Critical Assessment of Recent Contributions," Cambridge Journal of Economics, Oxford University Press, vol. 25(5), pages 571-589, September.
    10. Lawson, Tony, 1989. "Abstraction, Tendencies and Stylised Facts: A Realist Approach to Economic Analysis," Cambridge Journal of Economics, Oxford University Press, vol. 13(1), pages 59-78, March.
    11. Malerba, Franco, et al, 1999. "'History-Friendly' Models of Industry Evolution: The Computer Industry," Industrial and Corporate Change, Oxford University Press, vol. 8(1), pages 3-40, March.
    12. Stephen Pratten, 2005. "Economics as progress: the LSE approach to econometric modelling and critical realism as programmes for research," Cambridge Journal of Economics, Oxford University Press, vol. 29(2), pages 179-205, March.
    13. Northover, Patricia, 1999. "Evolutionary Growth Theory and Forms of Realism," Cambridge Journal of Economics, Oxford University Press, vol. 23(1), pages 33-63, January.
    14. G. Silverberg & B. Verspagen, 1995. "Evolutionary Theorizing on Economic Growth," Working Papers wp95078, International Institute for Applied Systems Analysis.
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    Cited by:

    1. G. Hodgson., 2006. "Some Claims Made for Critical Realism in Economics: Two Case Studies," VOPROSY ECONOMIKI, N.P. Redaktsiya zhurnala "Voprosy Economiki", vol. 7.
    2. Brunk, Gregory G. & Hunter, Kennith G., 2008. "An ecological perspective on interest groups and economic stagnation," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 37(1), pages 194-212, February.
    3. repec:oup:cjrecs:v:10:y:2017:i:3:p:509-526. is not listed on IDEAS
    4. Olsson, Ola, 2000. "A Microeconomic Analysis of Institutions," Working Papers in Economics 25, University of Gothenburg, Department of Economics.
    5. Jeremy Howells, 2011. "Innovation and Globalisation: A Systems of Innovation Perspective," Chapters,in: The Handbook of Globalisation, Second Edition, chapter 5 Edward Elgar Publishing.
    6. Kobos, Peter H. & Erickson, Jon D. & Drennen, Thomas E., 2006. "Technological learning and renewable energy costs: implications for US renewable energy policy," Energy Policy, Elsevier, vol. 34(13), pages 1645-1658, September.
    7. Fernando Collantes, 2009. "Rural Europe reshaped: the economic transformation of upland regions, 1850-2000 -super-1," Economic History Review, Economic History Society, vol. 62(2), pages 306-323, May.
    8. Nicholas Apergis & Spyros Zikos, 2003. "The Law of Verdoorn: Evidence from Greek Disaggregated Manufacturing Time Series Data," The Economic and Social Review, Economic and Social Studies, vol. 34(1), pages 87-104.

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