Causes of the Slow Rate of Economic Growth in the UK

The Essential Kaldor 01/1966;
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    • "The Kaldor-Verdoorn Law in itself does not provide any explanation on the mechanisms underlying technical change or the existence of these increasing returns. The theoretical foundations brought to the Kaldor-Verdoorn Law by Kaldor (1966) remained verbal. Only few formal attempted micro-foundations of the law can be found in the literature. "
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    ABSTRACT: This paper proposes to analyse the micro-level sources for productivity gains at an aggre-gated level. The paper reverts to a micro-founded model of technological change in-line with the evolutionary literature. The data generated through numerical simulations are used to identify the sources of increasing returns as measured by the Kaldor-Verdoorn Law. In this respect we also aim to provide some plausible micro-foundations for this macro-economic law. The paper shows that: (i) Dynamic increasing returns appear as an emergent property of the model; (ii) micro-characteristics of technical change, as the amplitude and the frequency of changes, as well as selection mechanisms significantly shape these increasing returns.
    Understanding Economic Change: Contributions to an Evolutionary Paradigm in Economics, Edited by U.Witt and A.Chai (eds, 09/2015: chapter 7; Forthcoming.
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    • "To make progress on this agenda, we have, through meticulous cleaning, merging and verification efforts, assembled international measures of manufacturing employment shares for 63 countries from 1970 to 2010. We also have manufacturing shares in real value added (henceforth " output shares " ) for all these countries, plus for another 72. 2 The employment sample represents 82% of the world's population in 2010, 1 For some classic and more recent contributions, see Kaldor (1966), Chenery et al. (1986) "
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    ABSTRACT: We assemble a large database of countries' manufacturing employment and output shares for 1970-2010. We ask whether increased global competition and labor-displacing technological change have made it more difficult for countries to industrialize in employment, and whether there are alternative routes to prosperity. We find that: (1) All of today's rich non-oil economies enjoyed at least 18% manufacturing employment shares in the past, and often did so before becoming rich; (2) Manufacturing employment peaks at lower incomes and shares today (typically below 18%), than in the past (often over 30%); (3) Although manufacturing labor productivity grew faster than non-manufacturing labor productivity within countries, they grew at similar rates globally, because factory jobs moved to less productive countries; and (4) Manufacturing's global employment share has not declined during the last 40 years. Industrialization has become more difficult, not because the sector has eliminated labor globally, but because of heightened international competition.
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    • "In advanced stages of development , self-sustained growth relies on the combination of growth impulses linked to external demand with the self-generated growth of domestic demand: " both rate of growth of induced investments and the rate of growth of consumption become attuned to the rate of growth of the autonomous component of demand, so that [the latter] will govern the rate of growth of the economy as a whole. " Kaldor (1966) 2 For Kaldor the whole growth process is in turn driven by this autonomous component of demand, function of the world income growth. From his diverse contributions Kaldor derives what he calls 'the principles of cumulative causation', according to which economic growth is a self-reinforcing phenomenon generating the necessary resources to sustain itself over the long-run. "
    EMAEE 2015: 9th European Meeting on Applied Evolutionary Economics, Maastricht; 06/2015
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