Kaldor’s Growth Laws and the Principle of Cumulative Causation

Abstract

Kaldor’s one-sector models from the 1950s and early 1960s aimed to resolve a puzzle in Keynesian economics: the ‘stylized facts’ seemed to show continued growth at near full employment in most advanced capitalist countries, and a coherent Keynesian explanation of this observation was lacking. By the mid-1960s, however, Kaldor had come to believe that the one-sector models gave a misleading picture. In reality, he argued, few, if any, economies were subject to binding labour supply constraints. He now emphasized sectoral differences, arguing that the manufacturing sector plays a key role in the growth process. This framework lends itself to the analysis of spatial problems of uneven development. ‘North-South’ models essentially identify the North with the secondary sector and the South with primary production, and the interaction between the two sectors thus has regional implications. The present chapter, however, is mainly concerned with uneven development across different industrial regions.