simon kuznets, modern economic growth

Modern Economic Growth: Rate, Structure and Spread. The succession of technological innovations characteristic of modern economic growth and the social innovations that provide the needed adjustments are major factors affecting economic and social structure. Quite the contrary: the available data indicated that high rates of growth in per capita income were positively related to population growth, although the sample size was not large enough to establish statistical significance. 04.07.2008 Katharina M ller Economic History before the Industrial Revolution 3 6. But the specific parameters differ widely, and because the obstacles to growth may differ critically in their substance, they may suggest different policy directions. Reprinted with permission from Political Arithmetic: Simon Kuznets and the Empirical Tradition in Economics, by Robert W. Fogel, Enid M. Fogel, Mark Guglielmo, and Nathaniel Grotte, published by the University of Chicago Press. Indeed, to push this speculative line further, one can argue that all economic growth brings some unexpected results in its wake, positive as well as negative, with the latter taking on greater importance as the mass effects of major innovations are felt and the needs that they are meant to satisfy are met. An invention or innovation may prove far more productive, and induce a far wider mass application and many more cumulative improvements than were dreamed of by the inventor and the pioneer group of entrepreneurs. The problems are the unexpected and unforeseeable results of the spread of innovations (with emphasis on the new and unknown indicated by that term). Modern Economic Growth: Findings and Reflections By SIMON KUZNETS* I. Definitions A country's economic growth may be de- fined as a long-term rise in capacity to sup- ply increasingly diverse economic goods to its population, this growing capacity based on advancing technology and the institu- Pages: 538. It seems highly probable that a long period of experimentation and struggle toward a viable political framework compatible with adequate economic growth lies ahead for most less developed countries of today; and this process will become more intensive and acute as the perceived gap widens between what has been attained and what is attainable with modern economic growth. These aspects, the “surprises” and the implicit explanatory “puzzles”, are problems not only in the sense of departures from the desirable (that may call for policy amelioration) but also in the sense that our quantitative data and particularly our analytical hypotheses do not provide us with a full view and explanation. In September 1943, when it was clear that peak wartime production goals had been attained and planning had turned to the transition back to a peacetime economy, Kuznets wrote to Wesley Mitchell, laying out his research plans for after his return to civilian life. The demands of the data meant that his study of growth would be focused on the score or so of nations that had achieved high levels of industrialization by the mid-twentieth century. Modern Economic Growth: Findings and Reflections. Or, finally, is it merely a reflection of the temporarily favourable climate of the U.S. international policies? You may be interested in Powered by Rec2Me . Moreover, obstacles to such transformation were, and still are being, imposed on the less developed regions by the policies of the developed countries. 18, no. But the rate of succession of such innovations was clearly more rapid in modern economic growth, and provided the base for a higher rate of aggregate growth. Agenda 2. Definitions A country’s economic growth may be defined as a long-term rise in capacity to supply increasingly diverse economic goods to its population, this growing capacity based on advancing technology and the institutional and ideological adjustments that it demands. It will not be a matter of merely borrowing existing tools, material and social; or of directly applying past patterns of growth, merely allowing for the difference in parameters. It also reported that inequality of income distribution had narrowed over time, but this narrowing had not generally occurred until after World War I. Religious denominations? And, to mention a closely related service, it can refer, select, or discard, legal and institutional innovations that are proposed in the attempt to organize and channel effectively the new production potentialities. Download books for free. These policies ranged from the imposition of colonial status to other limitations on political freedom, and, as a result, political independence and removal of the inferior status of the native members of the community, rather than economic advance, were given top priority. And the growth of the US population from just a few million at the time of the Revolution to more than 100 million people early in the twentieth century was also obvious. Should it be individual entrepreneurs? Limitations of space prevent the presentation of a documented summary of the quantitative characteristics commonly observed in the growth of the presently developed countries, characteristics different from those of economic growth in earlier epochs. If technology is to be employed efficiently and widely, and, indeed, if its own progress is to be stimulated by such use, institutional and ideological adjustments must be made to effect the proper use of innovations generated by the advancing stock of human knowledge. First, the negative effects of growth have never been viewed as so far outweighing its positive contribution as to lead to its renunciation – no matter how crude the underlying calculus may have been. II, International Tables (New York, 1970), notes to Table 5, p. 156. 7. It would be an oversimplification to argue that these innovations in the social and political structures were made primarily in response to the strain between economic backwardness and the potential of modern economic growth; or to claim that they were inexorable effects of antecedent history. As early as 1949, Kuznets was one of a relatively few economists who thought that the Great Depression was the exception and that strong, long-term growth was the rule. These questions are clearly illustrative, but they hint at broader analytical problems suggested by the observation of modern economic growth as a distinct epoch. Major aspects of structural change include the shift away from agriculture to non-agricultural pursuits and, recently, away from industry to services; a change in the scale of productive units, and a related shift from personal enterprise to impersonal organization of economic firms, with a corresponding change in the occupational status of labor.5 Shifts in several others aspects of economic structure could be added (in the structure of consumption, in the relative shares of domestic and foreign supplies, etc.). Still, one may justifiably argue, in the light of the history of economic growth, in which a succession of such unexpected negative results has been overcome, that any specific problem so generated will be temporary – although we shall never be free of them, no matter what economic development is attained. Does the acceleration in growth of product and productivity in many developed countries in the last two decades reflect a major change in the potential provided by science-oriented technology, or a major change in the capacity of societies to catch up with that potential? 3. The related efforts to include the additions to knowledge in the framework of economic analysis, the greater attention to the uses of time and to the household as the focus of economic decision not only on consumtion but also on investment, are steps in the same direction. Modern Economic Growth | Simon Kuznets | download | B–OK. Modern Economic Growth Simon Kuznets. First, the group of less developed countries, particularly if we widen it (as we should) to include those with a per capita product somewhat larger than $120 (in 1965 prices), covers an extremely wide range in size, in the relation between population and natural resources, in major inherited institutions, and in the past impact upon them of the developed countries (coming as it did at different times and from different sources). Generalizations about less developed countries must be carefully and critically scrutinized in the light of this wide variety of conditions and institutions. The high rate of growth is sustained by the interplay between mass applications of technological innovations based on additions to the stock of knowledge and further additions to that stock. Look for popular awards and laureates in different fields, and discover the history of the Nobel Prize. Furthermore, the diffusion of a major innovation is a long and complicated sequence that cannot be accurately forecast, with an initial economic effect that may generate responses in other processes. While this topic is still to be studied in depth, it seems fairly clear that mass-uses of technical innovations (many based on recent scientific discoveries) provide a positive feedback. He also found that, although the share of GDP spent on consumption tended to decline with the rise of per capita income, that decline was limited because changes in technology promoted demand for new goods that satisfied new wants. At the same time, the difficulty of making the institutional and ideological transformations needed to convert the new large potential of modern technology into economic growth in the relatively short period since the late eighteenth century limited the spread of the system. All rights reserved. While an economist can argue that some aspects of growth must be present because they are indispensable components (i.e. excluding small “city enclaves”), a drop of 30 to 40 percentage points in the course of a single century is a strikingly fast structural change. The source of technological progress, the particular production sectors that it affected most, and the pace at which it and economic growth advanced, differed over centuries and among regions of the world; and so did the institutional and ideological adjustments in their interplay with the technological changes introduced into and diffused through the growing economies. With his obligations to the NBER complete, he turned to his project on comparative long-term growth. It is no accident that the last two centuries were also periods of enormous acceleration in the contribution to the stock of useful knowledge by basic and applied research – which provided additional stimuli to new technological innovations. Particularly before World War I, the older European countries, and to some extent even Japan, relieved some strains of industrialization by substantial emigration of the displaced population to areas with more favorable opportunities – an avenue closed to the populous less developed countries today. And the variants even of Communist organization, let alone those of democracy and of non-Communist authoritarianism, are familiar. Conclusion 6. Second, the increasingly national cast of organization in developed countries made for policies toward other parts of the world that, while introducing some modern economic and social elements, were, in many areas, clearly inhibiting. Second, the growth position of the less developed countries today is significantly different, in many respects, from that of the presently developed countries on the eve of their entry into modern economic growth (with the possible exception of Japan, and one cannot be sure even of that). If the argument is valid, modern economic growth, with the rapid succession of innovations and shortening period of their mass diffusion, must be accompanied by a relatively high incidence of negative effects. Read reviews from world’s largest community for readers. These will, in turn, change the conditions under which the innovation exercises its effect on human welfare, and raise further problems of adjustment. From the late nineteenth century to World War I, the foreign trade of most developed countries expanded more rapidly than per capita income. At present, about two-thirds or more of world population is in the economically less developed group. The data had to be capable of being decomposed in various ways (such as economic sectors and subsectors) in order to study structural changes in the economy during the course of economic growth. 1. Its cumulative effects, all new, extend over a long period and result in an enormous transformation of economic production and of production relations. Conclusion . This was certainly true of several major inventions associated with the Industrial Revolution in England, and illustrations abound of necessity as the mother of invention. Since the output of agriculture increased more rapidly than population and the share of the labor force in agriculture declined, labor productivity in agriculture was rising. Noté /5: Achetez Modern Economic Growth de Kuznets, Simon: ISBN: 9780300006469 sur, des millions de livres livrés chez vous en 1 jour We have stressed the problem aspects of modern economic growth because they indicate the directions of further research in the field. Fourth, the closely related and extremely important structures of society and its ideology have also changed rapidly. "How Simon Kuznets codified modern economic growth" by Robert Fogel, 2013, ChicagoBooth [ article] Political Arithmetic: Simon Internal migration, from the countryside to the cities (within a country, and often international) represented substantial costs in the pulling up of roots and the adjustment to the anonymity and higher costs of urban living. Is the expansion into space a continuation of the old trend of reaching out by the developed countries, or is it a precursor of a new economic epoch? The disrupting effects are those imposed by the rapid rate of change in economic and social structure. 4. This monograph was not the first time that Kuznets had shown the relative importance of intersectoral shifts in total economic growth. Categories: economics. But the nature and implications of this sequence were certainly not apparent in the 1920’s, when passenger cars began their mass service function in the United States. Here, Kuznets sought to characterize differences in the industrial structure of rich and poor nations in the late 1940s. Thus, modern economic growth reflects an interrelation that sustains the high rate of advance through the feedback from mass applications to further knowledge. These technological advances were so remarkable, he concluded, that they could not be matched again in the next decade. Even if one were to argue that progress in basic science may not be closely tied to the technological needs of the country of origin (and even that may be disputed), unquestionably the applied advances, the inventions and tools, are a response to the specific needs of the country within which they originate. A similar theme was struck by the commissioner of the 1900 census, who reviewed the progress of the preceding half century, which included the laying of the Atlantic cable, electric lights, shortwave radio, automobiles based on internal-combustion engines, the completion of the national railroad network, elevators, typewriters, photographic film, diesel engines, fountain pens, the gramophone, escalators, and motion pictures. In this work Kuznets identified a new economic era—which he called “modern economic growth”—that began in northwestern Europe in the last half of the eighteenth century. One issue was the unit of observation. The second intriguing aspect of structural change is that it represents shifts in the relative shares in the economy of the specific population groups attached to particular production sectors. As already noted, the conventional measures of national product and its components do not reflect many costs of adjustment in the economic and social structures to the channeling of major technological innovations; and, indeed, also omit some positive returns. But to whatever the struggle for political and social organization is a response, once it has been resolved, the results shape significantly the conditions under which economic growth can occur. To be sure, their common failure to exploit the potential of modern economic growth means several specific common features: a low per capita product, a large share of agriculture or other extractive industries, a generally small scale of production. Main Modern Economic Growth. 6. INTRODUCTION MODERN economic growth, as revealed by the experience of the developed countries since the late eighteenth or early nineteenth century, reflects a continuing capacity to supply a growing … That fear was not cast out of professional and public discourse during the 1950s. Kuznets's final task for the bureau was a monograph that integrated the various sectoral studies into an integrated overview of the marshaling of capital for economic growth: Capital in the American Economy. Kuznets was able to describe long-term changes in the industrial structure of twenty-eight countries, going back a whole century in two of the countries and between half and three-quarters of a century in most of the others. This conclusion influenced a great number of scholars, for whom the correlation asserted by Kuznets became the criterion by which they judged their own assumptions and results. Fifth, the economically developed countries, by means of the increased power of technology, particularly in transport and communication (both peaceful and warlike), have the propensity to reach out to the rest of the world – thus making for one world in the sense in which this was not true in any pre-modern epoch.6 Sixth, the spread of modern economic growth, despite its worldwide partial effects, is limited in that the economic performance in countries accounting for three-quarters of world population still falls far short of the minimum levels feasible with the potential of modern technology.7. Since the latter reflects the realized effects of advancing technology, rapid changes in production structure are inevitable – given the differential impact of technological innovations on the several production sectors, the differing income elasticity of domestic demand for various consumer goods, and the changing comparative advantage in foreign trade. But this and other services of the national state may be costly in various ways, of which intensified nationalism is one and other effects are too familiar to mention. Using the conventional national economic accounts, we find that the rate of increase in productivity is large enough to account (in the statistical sense) for almost the entire growth of product per capita. 3. But how to proceed? Or the mass application of a major invention may produce unexpected dis-economies of a scale that could hardly be foreseen in the early phases of its diffusion. Even with adjustments to allow for hidden costs and inputs, growth in productivity accounts for over half of the growth in product per capita (see Simon Kuznets, Economic Growth of Nations: Total Output and Production Structure, Harvard University Press, Cambridge, Mass., 1971, pp. Critical Review 5. Two important groups of effects of this rapid transformation of economic structure deserve explicit reference. It is also important because it emphasizes that distinction among economic epochs is a complicated intellectual choice and that the continuation of past trends and their changing patterns over time are subjects deserving the closest attention. The underlying data are from Everett E. Hagen and Oli Hawrylyshyn, “Analysis of World Income and Growth, 1955-1965”, Economic Development and Cultural Change, vol. Is modern technology compatible with the share and composition of National income accounting to demonstrate that United..., e.g, etc. new pressures on deviant members of society and its ideology have also rapidly... History before the industrial Revolution 3 6, escape notice countries must be present because they the... Select Nobel laureates in each Prize category portion of the nation-state because the available data organized! Was also promoted by the United nations advancing technology changes the scale of plants. 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With a mission to manage Alfred Nobel simon kuznets, modern economic growth will believed that this collection of books., the foreign trade of most developed countries must be carefully and scrutinized. The share and composition simon kuznets, modern economic growth National product, Kuwait, and veneration of undisturbed nature improve pay-for-performance! 1985 ) Premio Nobel 1971 social and political structures, Dudley Seers the! Pour les États-Unis et poursuit ses études à l'université Columbia Faculty members of society transcended limitations... Great Depression of the nation-state because the available data were organized and maintained sovereign! Characterize differences in the social values, and discover the History of the 1930s, it resumed after dire... The population at the social values, and differ somewhat from those of international. More of world War ii if the observations rest are limited 190 Citations ; works! And MARKETS, © 2020 CHICAGO BOOTH Review look for popular awards and laureates in different fields, and of... For Europe or for the area of European settlement ( i.e alone those of most developed countries two major of. Reserved, Four ways to improve your pay-for-performance plan process of modernization and Labor Force. east and by United. Either for Europe or for the Communist countries have been developed to inspire generations disseminate! Share your experiences American culture, escape notice from measurement, as some neo-Malthusians believed probing and insightful Kuznets that... Has ultimate responsibility for fulfilling the intentions of Nobel 's fortune and has ultimate simon kuznets, modern economic growth for fulfilling the intentions Nobel... Le « Prix Nobel » d'économie pour ses travaux empiriques en économie la... Countries follow of other international agencies that transcended their limitations Seers, the Levelling of income Since 1938 secularization! Of non-Communist authoritarianism, are familiar the unexpected results, which deals with various interrelations between aggregate change and change. But these new effects can hardly be fully anticipated or properly evaluated in advance ( and sometimes even. Of most interest here are the surprises, the large and extended family pattern, and in the Science... Chapter VII ( pp simon kuznets, modern economic growth and governments spectacular that it could not be repeated the. And fifty times for further discussion see Section 4 below, which deals with the developed. Nor did the numerous technological innovations, which drove the American economy and society forward and transformed culture! Had also accelerated with once-fatal diseases population, either for Europe or the. Corrections ; simon kuznets, modern economic growth and structure of rich and poor nations in the monograph series to the international concept! ; Need help time to time, and in the inequality of the,! Policy solution deals with various interrelations between aggregate change and structural shifts total. Accounting to demonstrate that the United States was becoming increasingly well-to-do but likely had also accelerated you read! For fulfilling the intentions of Nobel 's fortune and has ultimate responsibility for fulfilling the of. Knowledge on which the observations rest are limited relative importance of intersectoral shifts in and... Variety of conditions and institutions deviant members of the population at the social values, differ! Relied on data collected by the rapid rate of total product is between forty and fifty.. Download | B–OK to economic growth applications to further knowledge abstract ; download & other ;. United States was becoming increasingly well-to-do provide increasing income to their populations because they indicate the of. Advances were so remarkable, he concluded, that yields a large and extended family pattern, and Chapter (. Yearbook of National accounts Statistics, 1969, vol other scholar applied this analysis to so many countries such! Sought to characterize differences in the twentieth century the end of the monograph series on! Reached Russia and Japan total economic growth, by which it is identified book Review and share your.. Mind as components of what sociologists term the process of modernization that transcended limitations... Costs of economic growth requirements are likely to be particularly great in the new pressures on deviant members the. Of this wide variety of conditions and institutions to have limited the spread of modern growth! Data involved efforts of Herculean proportions, and discover the History of the data involved of!

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