Economic Growth in the West

The volumes under review are interesting and important in two respects. First, they are serious studies of the remarkable resurgence of the growth of productivity in the Common Market countries relative to the experience of the United States and the United Kingdom. Second, they provide the empirical phenomena against which to assess the value of the various growth theories in explaining economic growth in the West. Angus Maddison attempts to explain why and how the European economy accelerated its growth in the 1950s; why the U.S. has not shared in this acceleration; and why the performance of some European countries has been better than others . His study did not arise from any desire to theorize about growth, but out of a practical interest in forecasting what the future development of the Western industrial economies would be . His theoretical framework is extremely simple and does not utilise recent developments; it is based upon the HarrodDomar framework. A. Lamfalussy seeks to explain why, in every single year since the early 1950s, the Common Market countries as a group have been growing more rapidly thaii the British economy. Lamfalussy uses a modified Harrod-Domar idenitity to organize his explanation of these phenomena, and, like Maddison, does not employ the recent techniques of analysis.3 This article is divided into three parts. First, the authors' conclusions and theoretical approaches are summarised. Second, their work is evaluated critically. It is shown that the use of the Harrod-Domar framework is either powerless to explain empirical phenomena or yields highly misleading conclusions. Third, it is shown how the use of modern growth theory would provide a more efficient analytical tool than those used by the authors

Economics · Economic Growth and Productivity · Economic Theory and Policy · Global Financial Crisis and Policies