The Dynamic Harrod Foreign Trade Multiplier and the Demand-orientated Approach to Economic Growth: an Evaluation |
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Authors: | J. S. L. McCombie A. P. Thirlwall |
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Affiliation: | 1. Downing College , Cambridge , CB2 1DQ , UK;2. Keynes College, University of Kent at Canterbury , Canterbury , CT2 7NP , UK |
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Abstract: | This paper puts forward a demand-orientated model of economic growth, as an alternative to the supply-orientated approach of neoclassical theory, and evaluates the extensive research testing the dynamic Harrod trade multiplier model developed by Thirlwall and extended by McCombie. It is critical of the continued dismissal of demand constraints as an explanation of inter-country growth rate differences in the models of McGregor & Swales, Crafts, Krugman, etc., and in the ‘new’ growth theory literature, although it is sympathetic to the rehabilitation of the role increasing returns for an understanding of cumulative processes which make for divisions in the world economy. |
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