A New View Of Economic Growth (clarendon Paperbacks)

A New View of Economic Growth This page intentionally left blank A New View of Economic Growth Maurice FitzGerald Scott CLARENDON PRESS OXFORD Great Clarendon Street, Oxford OX2 6DP Oxford New York Auckland Bangkok Buenos Aires Cape Town Chennai Dar es Salaam Delhi Hong Kong Istanbul Karachi Kolkata Kuala Lumpur Madrid Melbourne Mexico City Mumbai Nairobi São Paulo Shanghai Taipei Tokyo Toronto Oxford is a registered trade mark of Oxford University Press Published in the United States by Oxford University Press Inc., New York © Maurice FitzGerald Scott 1989 First published 1989 First issued in paperback 1991 Re-issued 1998 All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, without the prior permission in writing of Oxford University Press, or as expressly permitted by law, or under terms agreed with the appropriate reprographcs rights organization. Enquiries concerning reproduction outside the scope of the above should be sent to the Rights Department, Oxford University Press, at the address above You must not circulate this book in any other binding or cover and you must impose this same condition on any acquirer British Library Cataloguing in Publication Data Scott, M. Fg. (Maurice FitzGerald) A new view of economic growth. 1. Economic growth I. Title 339.5 ISBN 0-19-828742-9 Library of Congress Cataloging in Publication Data Scott, Maurice FitzGerald. A new view of economic growth / Maurice FitzGerald Scott. p. cm. Bibliography: P. Includes index. 1. Economic development. 2. Industrial productivity. I. Title. HD82.S394 1989 33.9-dc19 88-25312 ISBN 0-19-828742-9 To Eleanor This page intentionally left blank Preface Confronted by a book of some 600 pages on economic growth (albeit with a summary), readers may reasonably ask why it is so long, and whether the claim to novelty in the title is justified. The book has four parts, of which the third, ‘Construction’, puts forward what I believe to be a new theory of economic growth. Orthodox growth theories explain both the level and growth of output by three main variables: employment, the capital stock, and technical progress. My theory does not attempt to explain the level of output, only its change over a given period, and in that respect is more historical. The capital stock is not of central interest, and there is no separate rate of technical progress. The growth of output is explained by two main variables: the growth of employment and the rate of investment. There are several unorthodox growth theories which make technical progress endogenous, but mine differs from all those I am aware of in important respects. Many of them have retained some of the features of orthodox growth theory which I have discarded, such as a production function with capital and labour as its arguments, or vintages of capital equipment. One especially important difference from most other unorthodox theories is that I have sought to show that mine can be used empirically to answer the usual questions asked of any growth theory: why growth rates differ; why the shares of wages and profits are what they are, and have changed; why some alleged regularities (Verdoorn's, Kaldor's, and Fabricant's laws relating to produ