Economic Growth, Technology and Structural
Change
1. Economic Growth, Technology and Structural Change
Economic Development: Growth is associated with structural, social change and change in the important institutions of the economy.
These institutions evolve within the development process.
Institutions are the result of past historical and social developments. Since different countries have different pasts, institutions will vary.
“Development is about improving the quality of people’s lives, expanding their ability to shape their own futures”
“Development is the process of expanding the real freedom that people enjoy, with expansion of freedom viewed as the primary end and the principle means of development”.
Development is multi-faceted and therefore difficult to measure as oppose to economic growth.
Policies that work well in one country may not work in others.
Cumulative causation: Development is not a smooth process as it is related to vicious and virtuous cycles.
Cumulative causation suggests that difference will magnify whereby convergence (a mainstream economic concept) will not be achievable. Cumulative causation destructs the concept of equilibrium. Neo-classical economics suggests that deviation from equilibrium will lead to increasing deviations.
Conversely, the view of convergence, it is believed that growth rates, income etc will all converge. After WWII, USA had a big lead over most countries. Countries such as Japan and the NICS took advantage of ‘backwardness’ and caught up. This ability is through diffusion – importing or copying their products/technology. Once a ‘blue print’ of plans are developed, latecomers have free access.
2. Economic growth = factors that explain increased output
Economic development = concerned with changes in technology, structural, social and institutional arrangements that output is produced ( includes non-economic issue
Development = institutions and attitudes of society
MYDRAL: upward movement of the entire social system
Economic Development: Growth is associated with structural, social change and change in the important institutions of the economy.
These institutions evolve within the development process.
Institutions are the result of past historical and social developments. Since different countries have different pasts, institutions will vary.
“Development is about improving the quality of people’s lives, expanding their ability to shape their own futures”
“Development is the process of expanding the real freedom that people enjoy, with expansion of freedom viewed as the primary end and the principle means of development”.
Development is multi-faceted and therefore difficult to measure as oppose to economic growth.
Policies that work well in one country may not work in others.
Cumulative causation: Development is not a smooth process as it is related to vicious and virtuous cycles.
Cumulative causation suggests that difference will magnify whereby convergence (a mainstream economic concept) will not be achievable. Cumulative causation destructs the concept of equilibrium. Neo-classical economics suggests that deviation from equilibrium will lead to increasing deviations.
Conversely, the view of convergence, it is believed that growth rates, income etc will all converge. After WWII, USA had a big lead over most countries. Countries such as Japan and the NICS took advantage of ‘backwardness’ and caught up. This ability is through diffusion – importing or copying their products/technology. Once a ‘blue print’ of plans are developed, latecomers have free access.
2. Economic growth = factors that explain increased output
Economic development = concerned with changes in technology, structural, social and institutional arrangements that output is produced ( includes non-economic issue
Development = institutions and attitudes of society
MYDRAL: upward movement of the entire social system