Growth Theory in Retrospect and Prospect

Abstract

The theories discussed above appear as sterile, unrealistic descriptions of conditions that never exist in reality. The models describe economies that exist only in equilibrium over time. The labour force grows at a constant rate and technological change seldom has anything but a neutral effect on the growth path. The models are not dynamic in the sense that disequilibrium change can occur (dynamics is not to statics what disequilibrium is to equilibrium). A better title for this book might have been Dynamic Equilibrium Theory, indicating the absence of the analysis of any realistic growth process. With the models presented here it is difficult to learn anything about government actions to promote growth; the effect of the trade balance on growth; the currently fashionable problem of growth versus amenities; the effects of industrial concentration; the trade-off between foreign investment and exports in entering foreign markets; and the consequences of large multinational enterprises for steady growth, to mention just a few possible areas of current interest.