Growth and Development from an Evolutionary Perspective

by Fei, John; Ranis, Gustav

• ISBN13: 9780631218890
• ISBN10: 0631218890
• Edition: 1st
• Format: Paperback
• Copyright: 1999-11-22
• Publisher: Wiley-Blackwell

Summary

We are currently experiencing a revival of interest in development, partly as a consequence of recent work in the so called new growth theory arena, and partly because the recent debt crises has focused attention on the adjustment problems of the third world and on the policy lessons to be learned from the East Asian experience. This volume traces the evolution of relevant development theory from the Physiocrats and the Classical School, to Solow, Arthur Lewis and, finally, Lucas and Roemer. The central purpose in doing so is to borrow and on occasion adapt the various tool kits offered to improve our current understanding of the development process which we see, in Simon Kuznets' terminology, as a transition from agrarianism to modern economic growth.The theoretical chapters of the volume focus first on an analysis of closed and open agrarian societies, still relevant to many parts of sub-Saharan Africa, and on the conditions for graduation from agrarianism to dualism. We then turn to an examination of dualism in both the closed and open economy settings and to the requirements for successful graduation into economic maturity. In doing so we develop a general system of growth equations which bring into focus the central role of technology change and can be applied, with modifications, to the various sub-phases of transition as well as to the modern growth epoch. We subsequently deploy our analytical tools to examine developmental performance in the broader context including the contemporary concerns with distribution, poverty alleviation and human development, as they relate to growth over time.Finally, we turn our attention to the policy implications of our view of the development process, emphasizing a comparison between the successful East Asian and the less successful Latin American cases. The volume concludes with a demonstration of how political economy considerations permit us to move towards an enhanced endogenization of policy choices. Throughout the book has a strong analytical orientation but is sensitive to historical time and typological differences across developing societies.

Author Biography

John C. H. Fei was formerly Chairman of the Board at the Chung Hua Institute of Economic Research in Taipei, Taiwan. Co-author of five books and more than 75 articles, Fei also served as consultant to organizations such as AID, NPA, UNDP and the National Science Council of Taiwan. A Ph.D. from Massachusetts Institute of Technology, he taught at Cornell University and Yale University.

Gustav Ranis is the Director of The Yale Center for International and Area Studies and Professor of International Economics at Yale University. Having served as consultant to such entities as The World Bank, ADB, AID, OECD, UNIDO, FAO, UNDP, and the Ford and Rockefeller Foundations, Ranis is on the advisory boards, of several third-world research institutions. He has written extensively on theoretical and policy-related issues of development.

Table of Contents

List of Figures	viii
List of Tables	xi
Preface	xiii
PART I INTRODUCTION	1	(48)
Growth and Development: An Overview	3	(46)
Introduction	3	(3)
Epochal and Transition Growth	6	(1)
The Epoch of Modern Economic Growth	7	(4)
The Epoch of Agrarianism	11	(5)
Colonial Heritage and Typological Sensitivity	16	(2)
The Evolution of Relevant Development Theory	18	(28)
Road Map to the Volume	46	(3)
PART II AGRARIANISM AND DUALISM	49	(114)
From Closed and Open Agrarianism to Modern Dualism	51	(36)
Graduation from Closed Agrarianism	51	(5)
Graduation from Open Agrarianism	56	(16)
Open Agrarianism with Z-Goods	72	(5)
Open Agrarianism with Abundant Supplies of Land	77	(6)
Appendix	83	(4)
Development of the Closed Dualistic Economy: A Bird's Eye View	87	(76)
Introduction	87	(1)
The Operation of a Dualistic Economy	88	(10)
Underlying Behavior Patterns in the Dualistic Economy	98	(11)
Labor Absorption Analysis	109	(7)
The Release of Labor from the Agricultural Sector	116	(16)
Interactions between the Industrial and Agricultural Sectors	132	(14)
Appendix: The Microeconomics of ``Surplus Labor''	146	(17)
PART III THE ANALYTICS OF GROWTH AND DEVELOPMENT	163	(84)
The Neoclassical production Function, Growth and Development	165	(29)
Introduction	165	(5)
Properties of the Neoclassical Production Function	170	(5)
Partial Elasticities of the Static Production Function	175	(5)
Derivation of Growth Equations	180	(3)
Innovation Intensity and Growth: Applications	183	(1)
The Factor Bias of Innovation	184	(6)
Factor Price and Factor Share-related Growth Equations	190	(4)
A General Analysis of Growth Systems	194	(23)
Introduction	194	(1)
From Harrod-Domar to Solow	195	(7)
Growth Conflicts and Technology Change	202	(13)
Structural Duality	215	(2)
Applications to Modern Economic Growth	217	(30)
Introduction	217	(1)
Classical Growth Theoretic Ideas	217	(2)
Marxian Notions of Growth	219	(5)
Schumpeterian Growth Theory	224	(5)
The Harrod Theory of ``Full Employment Growth''	229	(6)
Structural Duality	235	(8)
Growth in the Mature Economy	243	(4)
PART IV APPLICATIONS TO GROWTH AND DEVELOPMENT UNDER DUALISM	247	(120)
Transition Growth in the Closed Dualistic Economy	249	(33)
Introduction	249	(1)
Balanced Growth and the Necessity for Labor Reallocation	250	(12)
Underlying Conditions for Success	262	(6)
Historical Analysis of the Labor Reallocation Process	268	(8)
Employment/Output Trade-offs	276	(6)
Transition Growth under Open Dualism	282	(38)
Introduction	282	(2)
International Trade and Growth in the Labor-surplus Economy	284	(22)
Factor Mobility	306	(7)
Technology	313	(7)
Growth, Equity, and Human Development	320	(47)
Introduction	320	(3)
Income Distribution and Growth	323	(21)
Poverty Reduction, Basic Needs, and Human Development	344	(23)
PART V CONCLUSIONS FOR POLICY	367	(69)
Policy and Political Economy in the Transition to Modern Economic Growth	369	(67)
Introduction	369	(3)
Design for an Evolution-Oriented Methodology	372	(8)
Evolution Through Sub-phases	380	(21)
Growth Promotion Policies in the Course of Transition	401	(30)
The Political Economy of Policy from an Evolutionary Perspective	431	(5)
Bibliography	436	(9)
Index	445