Economic Growth and Development

The historical growth record is reviewed and growth is shown to have resulted in divergence between the incomes of fast growing rich economies and slower growing poorer economies. Supply-led, neoclassical growth is then contrasted with demand-led, Keynesian growth. Three Keynesian growth theories (Harrodian, Kaleckian, and Kaldorian) are outlined and shown to differ according to whether investment spending or export demand is the key “driver” of demand formation and growth. The properties of Keynesian growth are then identified and discussed. These include the relationship between saving behaviour and growth, the effects of income redistribution on growth, the relationship between technical progress and growth, and the interaction of supply and demand in the growth process.