What Are the Different Theories of Economic Growth?

The general characteristic of economic growth theory is to use equilibrium analysis methods and establish various economic models to examine the equilibrium conditions required to achieve stable and balanced growth in the dynamic process of long-term economic growth. There are two most common definitions of economic growth. One is that economic growth refers to the continuous growth of material products and services produced by an economy over a considerable period of time, that is, the continuous growth of actual total output. The other is that economic growth refers to the actual output calculated on the average of the population, that is, the continuous increase in real output per capita.

Economic growth theory

(Economic term)

Economic growth theory: It is a theory that studies and explains the law of economic growth and the factors that affect it.

Generally speaking, economic growth refers to the increase in the capacity of a country or region to produce goods and services. If population growth and price changes are taken into account, economic growth should also include growth in per capita welfare. American economist S. Kuznets gave a classic definition of economic growth: "The economic growth of a country can be defined as the long-term rise in the ability to provide residents with an increasingly wide variety of economic products. This growing ability It is based on advanced technology and the corresponding adjustment of the required system and ideology. "

Starting from its definition, S. Kuznets summarizes six characteristics of economic growth based on historical data: 1. The high output of population

Economic growth is generally a quantitative concept, while economic development is a more complex qualitative concept. In a broad sense, economic development includes not only economic growth, but also national

Regarding the source of economic growth,

The issue of economic growth is essentially a discussion of long-term trends in the potential production capacity of the economy and society.

Economic growth theory-economic growth is restricted by the following aspects:

(1) Resource constraints. Including natural conditions, the quality of labor, and the amount of capital.

(2) Technical constraints. Technical level directly affects production efficiency.

(3) Institutional constraints. The system stipulates people's labor methods, labor organization, material and commodity circulation, income distribution, etc., and defines the boundaries of people's economic behavior.

There are roughly two types of research on economic growth: one considers economic growth in general and establishes a so-called general growth model; the other introduces institutional factors to study economic growth. The former category starts with

Economic growth theory ^[1]

1. The core of economic growth theory. Economic growth theory has gone through two stages, classical growth theory and modern growth theory. With the development and improvement of economic growth theory, modern growth theory has gradually formed some very important cores. These cores form an integral part of studying economic growth theory.

(1) The first and most important core of economic growth theory is the idea of "equilibrium" in economic growth. Modern economic growth theory is based on a balanced analysis framework. Because the concept of equilibrium has constituted the most basic and core concept in the mainstream economic system, the core of economic growth theory is of course inseparable from the concept of equilibrium.

In Arrow-Debreu static general equilibrium, the concept of equilibrium inherits the connotation of Walrasian equilibrium. However, in Arrow-Debreu's world, the method of constructing a model is suitable to explain the static general equilibrium. Growth is a dynamic process, so economists must develop dynamic equilibrium from the concept of static equilibrium.

The development of the concept of equilibrium from static conditions to dynamic conditions is an important work that began in the 1960s. This work not only helps to make the concept of equilibrium dynamic, but more importantly, the method of making the concept of equilibrium dynamic has also led to the emergence of the rational anticipation school (the actual business cycle school).

Looking back at history, Hayek and Myrdal conducted groundbreaking research from the 1920s and 1930s. Since then, economists such as Hicks, Harold, Lucas, Prescott, etc. It is becoming increasingly clear how the concept of expectation extends static conditions to dynamic conditions. There is no doubt that it is precisely because of the introduction of the concept of expectation that the concept of equilibrium can be extended to the study of economic growth.

Equilibrium is "a typical result of the application of certain inputs, which is consistent with the predictions of economic actors. Many theorists, especially those who apply the" economic man "hypothesis, also require other Conditions that enable each participant to achieve the correct and optimal expectations "(Phelps, 1966). Obviously, in the static general equilibrium of Arrow-Debreu, equilibrium means that the demand and supply of each market are equal (the market is cleared), and the market is in the Pareto optimal state. In economic growth theory, equilibrium means The demand and supply of each market at each time position are equal (the market continues to clear). Equilibrium in economic growth theory is commonly called "balanced growth."

Starting from the connotation of equilibrium, the theory of economic growth separates two characteristics from a theoretical perspective: the market is always clear, and the market clear is always optimal.

(2) Another important core of modern economic growth theory is the "optimal" thought in economic growth. From the "equilibrium" core of economic growth theory, we have already seen the "optimal" idea. For economic growth theory, growth means that all potential resources are in a fully utilized state, which is of course based on the state of full employment and resource allocation reaching Pareto optimality. From this perspective, the theory of economic growth does contain the idea of "optimal", and the "optimal" in economic growth theory is not only at a certain point in time, but also for the entire period.

2. The theme of economic growth theory ^[1] . The theme of economic growth theory can be found in theoretical research or empirical research. We borrow Kaldor's argument that all theoretical and empirical research on economic growth is centered on two themes:

(1) Per capita output continues to increase, and its growth rate does not tend to decrease;

(2) The growth rate of per capita output varies greatly among countries.

Expressed in a more refined way, these two topics are (1) what are the sources of continuous economic growth? (2) will economic growth produce convergent results? The former represents the main purpose of economists studying economic growth It is to find the main factors that affect economic growth. For example, the analysis of growth factors attempts to measure the contribution of different factors to economic growth from an empirical perspective, and different growth models theoretically explain the source of power for economic growth. The latter represents the focus of economists on the results of economic growth-that is, the distribution of economic growth among different countries.