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Cumulative Growth and the Catching-up Debate from a Dis-equilibrium Standpoint

  • Miguel A. León-Ledesma

    ()

This paper presents an overview of the literature on 'cumulative growth'. It is argued that, independently of the 'new' growth theory, these models have achieved the nature of 'endogenous' growth models. Their main differences, however, lie in the assumptions about the equilibrium prevailing in the economy. Cumulative growth models do not assume a general equilibrium setting and, thus, the main driving force of growth is demand. Although the natural rate of growth is endogenous (through the effect of induced productivity growth), it can be shown that these models are compatible with a wide set of outcomes concerning the catching-up and convergence issue. In order to do this, we present a model of cumulative causation that, overcoming some of the weaknesses of previous models, allows for catching-up from followers to leader to occur. We also show how the induced productivity growth effect may lead to a faster catching-up rate, contrary to the popular result that it necessarily leads to divergence.

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File URL: ftp://ftp.ukc.ac.uk/pub/ejr/RePEc/ukc/ukcedp/0001.pdf
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Paper provided by School of Economics, University of Kent in its series Studies in Economics with number 0001.

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Date of creation: Feb 2000
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Handle: RePEc:ukc:ukcedp:0001
Contact details of provider: Postal: School of Economics, University of Kent, Canterbury, Kent, CT2 7NP
Phone: +44 (0)1227 827497
Web page: http://www.kent.ac.uk/economics/

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  1. Kaldor, Nicholas, 1970. "The Case for Regional Policies," Scottish Journal of Political Economy, Scottish Economic Society, vol. 17(3), pages 337-48, November.
  2. Peter Skott & Paul Auerbach, 1995. "Cumulative Causation and the "New" Theories of Economic Growth," Journal of Post Keynesian Economics, M.E. Sharpe, Inc., vol. 17(3), pages 381-402, April.
  3. Stanley Fischer, 1993. "The Role of Macroeconomic Factors in Growth," NBER Working Papers 4565, National Bureau of Economic Research, Inc.
  4. Miguel A. LeÛn-Ledesma, 2002. "Accumulation, innovation and catching-up: an extended cumulative growth model," Cambridge Journal of Economics, Oxford University Press, vol. 26(2), pages 201-216, March.
  5. Romer, Paul M, 1990. "Endogenous Technological Change," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages S71-102, October.
  6. Baumol, William J, 1986. "Productivity Growth, Convergence, and Welfare: What the Long-run Data Show," American Economic Review, American Economic Association, vol. 76(5), pages 1072-85, December.
  7. Fagerberg, Jan, 1988. "International Competitiveness," Economic Journal, Royal Economic Society, vol. 98(391), pages 355-74, June.
  8. Arthur, W Brian, 1989. "Competing Technologies, Increasing Returns, and Lock-In by Historical Events," Economic Journal, Royal Economic Society, vol. 99(394), pages 116-31, March.
  9. Abramovitz, Moses, 1986. "Catching Up, Forging Ahead, and Falling Behind," The Journal of Economic History, Cambridge University Press, vol. 46(02), pages 385-406, June.
  10. Targetti, Ferdinando & Foti, Alessandro, 1997. "Growth and Productivity: A Model of Cumulative Growth and Catching Up," Cambridge Journal of Economics, Oxford University Press, vol. 21(1), pages 27-43, January.
  11. Thomas I. Palley, 1997. "Aggregate Demand and Endogenous Growth: a Generalized Keynes-Kaldor Model of Economic Growth," Metroeconomica, Wiley Blackwell, vol. 48(2), pages 161-176, 06.
  12. Dixon, R & Thirlwall, A P, 1975. "A Model of Regional Growth-Rate Differences on Kaldorian Lines," Oxford Economic Papers, Oxford University Press, vol. 27(2), pages 201-14, July.
  13. Anthony P. Thirlwall, 2011. "The Balance of Payments Constraint as an Explanation of International Growth Rate Differences," PSL Quarterly Review, Economia civile, vol. 64(259), pages 429-438.
  14. Dixon, R J & Thirlwall, Anthony P, 1978. "Growth Rate Stability in the Kaldorian Regional Model," Scottish Journal of Political Economy, Scottish Economic Society, vol. 25(1), pages 97-99, February.
  15. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
  16. Evans, Paul, 1996. "Using cross-country variances to evaluate growth theories," Journal of Economic Dynamics and Control, Elsevier, vol. 20(6-7), pages 1027-1049.
  17. Jonathan Temple, 1999. "The New Growth Evidence," Journal of Economic Literature, American Economic Association, vol. 37(1), pages 112-156, March.
  18. Miguel A. LeÛn-Ledesma & A. P. Thirlwall, 2002. "The endogeneity of the natural rate of growth," Cambridge Journal of Economics, Oxford University Press, vol. 26(4), pages 441-459, July.
  19. Paul M Romer, 1999. "Increasing Returns and Long-Run Growth," Levine's Working Paper Archive 2232, David K. Levine.
  20. Thomas I. Palley, 1996. "Growth Theory in a Keynesian Mode: Some Keynesian Foundations for New Endogenous Growth Theory," Journal of Post Keynesian Economics, M.E. Sharpe, Inc., vol. 19(1), pages 113-135, October.
  21. A. P. Thirlwall, 2007. "Regional Problems are "Balance-of-Payments" Problems," Regional Studies, Taylor & Francis Journals, vol. 41(sup1), pages S89-S95.
  22. Young, Allyn A., 1928. "Increasing Returns and Economic Progress," History of Economic Thought Articles, McMaster University Archive for the History of Economic Thought, vol. 38, pages 527-542.
  23. Fingleton, B & McCombie, J S L, 1998. "Increasing Returns and Economic Growth: Some Evidence for Manufacturing from the European Union Regions," Oxford Economic Papers, Oxford University Press, vol. 50(1), pages 89-105, January.
  24. Setterfield, Mark, 1997. "'History versus Equilibrium' and the Theory of Economic Growth," Cambridge Journal of Economics, Oxford University Press, vol. 21(3), pages 365-78, May.
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