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The Dynamic Harrod Foreign Trade Multiplier and the Demand-orientated Approach to Economic Growth: an Evaluation

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  • J. S. L. McCombie
  • A. P. Thirlwall

Abstract

This paper puts forward a demand-orientated model of economic growth, as an alternative to the supply-orientated approach of neoclassical theory, and evaluates the extensive research testing the dynamic Harrod trade multiplier model developed by Thirlwall and extended by McCombie. It is critical of the continued dismissal of demand constraints as an explanation of inter-country growth rate differences in the models of McGregor & Swales, Crafts, Krugman, etc., and in the 'new' growth theory literature, although it is sympathetic to the rehabilitation of the role increasing returns for an understanding of cumulative processes which make for divisions in the world economy.

Suggested Citation

  • J. S. L. McCombie & A. P. Thirlwall, 1997. "The Dynamic Harrod Foreign Trade Multiplier and the Demand-orientated Approach to Economic Growth: an Evaluation," International Review of Applied Economics, Taylor & Francis Journals, vol. 11(1), pages 5-26.
    • Handle: RePEc:taf:irapec:v:11:y:1997:i:1:p:5-26
    DOI: 10.1080/02692179700000001
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    References listed on IDEAS

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    1. Jonathan Perraton, 2003. "Balance of Payments Constrained Growth and Developing Countries: An examination of Thirlwall's hypothesis," International Review of Applied Economics, Taylor & Francis Journals, vol. 17(1), pages 1-22.
    2. Duncan Ironmonger & J. O. N. Perkins & Tran Hoa (ed.), 1988. "National Income and Economic Progress," Palgrave Macmillan Books, Palgrave Macmillan, number 978-1-349-19340-0.
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