Productivity Growth and Accumu-Lation as Historical Processes

Abstract

This paper belongs as much to the field of growth-model theory as productivity analysis. My first excuse is that the objectives are similar: Productivity analysis seeks to understand the reasons for divergent rates of growth between inputs and outputs; and growth-model theory seeks to define the relationships between the rates of growth of output, labour, capital and technical knowledge. My second excuse is that the particular problem in growth-model theory that I propose to examine is how the capital stock an economy inherits from the past influences its present rate of growth. This is a question that has some relevance to the effect of different stages of industrialization on productivity — although in this paper I am concerned only with theory and have resolved to eschew all practical implications.

To our great regret we have to record the death in November 1963 of Dr. Salter, one of the most brilliant of the younger generation of Australian economists, in Lahore, where he was acting as adviser to the government of West Pakistan. We print the paper as he wrote it.