Abstract
In the course of his Inaugural Lecture at Cambridge in 1966 on the causes of the U.K’s slow growth rate, Kaldor (1966) presented a series of “laws” to account, for growth rate differences between advanced capitalist countries; he later elaborated these laws in a lecture at Cornell University (1967). These laws, and their interpretation and validity, have been the subject of considerable scrutiny and debate, and Kaldor himself has clarified and modified his own position since their enunciation. The basic thrust of the model consists of the following propositions:1
-
i)
The faster the rate of growth of the manufacturing sector, the faster will be the rate of growth of Gross Domestic Product (GDP), not simply in a definitional sense in that manufacturing output is a large component of total output, but for fundamental economic reasons connected with induced productivity growth inside and outside the manufacturing sector. This is not a new idea. It is summed up in the maxim that the manufacturing sector of the economy is the “engine of growth.”
-
ii)
The faster the rate of growth of manufacturing output, the faster will be the rate of growth of labor productivity in manufacturing owing to static and dynamic economies of scale, or increasing returns in the widest sense. Kaldor, in the spirit of Allyn Young (1928), his early teacher at the L.S.E., conceives of returns to scale as macroeconomic phenomena related to the interaction between the elasticity of demand for and supply of manufactured goods.
First published in Journal of Post Keynesian Economics, Spring 1983.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Preview
Unable to display preview. Download preview PDF.
References
Cornwall, J. “Diffusion, Convergence and Kaldor’s Laws.” Economic Journal, June 1976
Cripps, T. F., and Tarling, R. J. Growth in Advanced Capitalist Economies 1950–1970. Cambridge University Press, 1973.
Kaldor, N. Causes of the Slow Rate of Economic Growth of the United Kingdom. Cambridge University Press, 1966.
—. Strategic Factors in Economic Development. Cornell University Press, 1967.
—. “Productivity and Growth in Manufacturing Industry: A Reply.” Economica, November 1968.
— “Economic Growth and the Verdoorn Law—a Comment on Mr. Rowthorn’s Article.” Economic Journal, December 1975.
—. Further Essays on Economic Theory. Duckworth, 1978.
—, and Vines, D. “A General Model of Growth and Development” (mimeo), 1980.
Kennedy, C, and Thirlwall, A. P. “Import Penetration, Export Performance and Harrod’s Trade Multiplier.” Oxford Economic Papers, July 1979.
Parikh, A. “Differences in Growth Rates and Kaldor’s Laws.” Economica, February 1978.
Rowthorn, R. “What Remains of Kaldor’s Law?” Economic Journal, March 1975.
Thirlwall, A. P. “The Balance of Payments Constraint as an Explanation of International Growth Rate Differences.” Banca Nazionale del Lavoro Quarterly Review, March 1979.
— “Rowthorn’s Interpretation of Verdoorn’s Law.” Economic Journal, June 1980.
—, “The Harrod Trade Multiplier and the Importance of Export Led Growth.” Pakistan Journal of Applied Economics, 1(1), Summer 1982.
Vaciago, G. “Increasing Returns and Growth in Advanced Economies: A Re-Evaluation.” Oxford Economic Papers, July 1975.
Verdoorn, P. J. “Fattori che Regolano lo Sviluppo della Produttivita del Lavoro.” L’Industria (English translation available on request from A. P. Thirlwall), 1949.
Wolfe, T. N. “Productivity and Growth in Manufacturing Industry: Some Reflections on Professor Kaldor’s Inaugural Lecture.” Economica, May 1968.
Young, A. “Increasing Returns and Economic Progress.” Economic Journal, December 1928.
Author information
Authors and Affiliations
Copyright information
© 2015 A.P. Thirlwall
About this chapter
Cite this chapter
Thirlwall, A.P. (2015). A Plain Man’s Guide to Kaldor’s Growth Laws. In: Essays on Keynesian and Kaldorian Economics. Palgrave Studies in the History of Economic Thought Series. Palgrave Macmillan, London. https://doi.org/10.1057/9781137409485_15
Download citation
DOI: https://doi.org/10.1057/9781137409485_15
Publisher Name: Palgrave Macmillan, London
Print ISBN: 978-1-349-48871-1
Online ISBN: 978-1-137-40948-5
eBook Packages: Palgrave Economics & Finance CollectionEconomics and Finance (R0)