An Alternative Framework for Understanding the Performance of Nations
Chapter 3: Manufacturing Industry as the Engine of Growth
The neoclassical approach to economic growth, and its offspring ‘new’ growth theory, are not only very supply-oriented, treating factor supplies as exogenously given, but are also very aggregative. They treat all sectors of the economy as if they are alike. They do not explicitly pick out any one sector as more important than another. In practice, however, aggregate growth will naturally be related to the rate of expansion of the sector with the most favourable growth characteristics. There is a lot of historical, empirical evidence to suggest that there is something special about industrial activity, and particularly manufacturing. There seems to be a close association across countries between the level of per capita income and the degree of industrialization, and there also seems to be a close association across countries between the growth of GDP and the growth of manufacturing industry. Countries which are growing fast tend to be those where the share of industry in GDP is rising most rapidly: the socalled ‘newly industrializing countries’ (the NICs). Is this an accident? 40 Thirlwall 02 chaps rprnt 40 28/6/07 15:02:02 Manufacturing industry as the engine of growth 41 One of the first economists to have seriously addressed this issue is the late Nicholas Kaldor, who argued in many of his writings (see Targetti and Thirlwall, 1989) that it is impossible to understand the growth and development process without taking a sectoral approach, distinguishing between increasing returns activities on the one hand (which he associated with industry) and diminishing...
You are not authenticated to view the full text of this chapter or article.
Elgaronline requires a subscription or purchase to access the full text of books or journals. Please login through your library system or with your personal username and password on the homepage.
Non-subscribers can freely search the site, view abstracts/ extracts and download selected front matter and introductory chapters for personal use.
Your library may not have purchased all subject areas. If you are authenticated and think you should have access to this title, please contact your librarian.