It also reported that inequality of income distribution had narrowed over time, but this narrowing had not generally occurred until after World War I. If the observations just made are valid, several implications for the growth problems of the less developed countries follow. Is the expansion into space a continuation of the old trend of reaching out by the developed countries, or is it a precursor of a new economic epoch? Fourth, the closely related and extremely important structures of society and its ideology have also changed rapidly. Author & abstract; Download & other version; 190 Citations; Related works & more ; Corrections; Author. While this topic is still to be studied in depth, it seems fairly clear that mass-uses of technical innovations (many based on recent scientific discoveries) provide a positive feedback. These rates – which mean roughly a multiplication over a century by five for product per capita, by three for population, and by more than fifteen for total product – were far greater than pre-modern rates. But the specific parameters differ widely, and because the obstacles to growth may differ critically in their substance, they may suggest different policy directions. His analyses of both the cross-sectional data and trends over time revealed that, as countries got rich, the agricultural share of the labor force declined. In some cases, these conflicts did break out into overt civil war, the Civil War in the United States being a conspicuous example. Particularly before World War I, the older European countries, and to some extent even Japan, relieved some strains of industrialization by substantial emigration of the displaced population to areas with more favorable opportunities – an avenue closed to the populous less developed countries today. The rapidity of structural shifts in modern times can be easily illustrated by the changes in the distribution of the labor force between agriculture (and related industries) and the non-agricultural production sectors. urbanization, internal migration, shift to employee status and what might be called the merit basis of job choice, have already been noted as characteristics of modern economic growth. Modern Economic Growth: Findings and Reflections. File: PDF, 33.73 MB. POPULATION AND ECONOMIC GROWTH SIMON KUZNETS Professor of Economics, Harvard University (Read in abbreviated form November 11, 1966, in the Symposium on Population Problems) 1. Of course, the stock of material and social technology that can be tapped by less developed countries today is enormously larger than that available in the nineteenth and even early twentieth centuries. These included a book presenting estimates of US wealth, national product, and capital formation going back to 1880 and his supervision of a series of monographs dealing with long-term trends in capital formation in various sectors of the US economy. But the quantitative base and interest in economic growth have widened greatly in the last three to four decades, and the accumulated results of past study of economic history and of past economic analysis could be combined with the richer stock of quantitative data to advance the empirical study of the process. Even with this narrow definition of less developed countries, the intermediate group was less than 0.7 billion, or less than 20 percent of world population.9 The preponderant population was thus divided between the very low and the rather high level of per capita economic performance. One issue was the unit of observation. By Simon Kuznets. In the United States, the share of labor force attached to the agricultural sector was still 53.5 percent in 1870 and declined to less than 7 percent in 1960. In the election of 1928, Herbert Hoover had made the extravagant promise that, if he was elected president, there would be a chicken (the most expensive meat at the time) in every pot and an automobile in every garage. Although the shift to the SSRC took place in 1949, Kuznets continued to work at the bureau to complete the projects under his supervision that were still in progress. The related efforts to include the additions to knowledge in the framework of economic analysis, the greater attention to the uses of time and to the household as the focus of economic decision not only on consumtion but also on investment, are steps in the same direction. The very magnitudes, as well as some of the basic conditions, are quite different: no country that entered modern economic growth (except Russia) approached the size of India or China, or even of Pakistan and Indonesia; and no currently developed country had to adjust to the very high rates of natural increase of population that have characterized many less developed countries over the last two or three decades. Please login to your account first; Need help? If the characteristics of modern economic growth are interrelated, in that one induces another in a cause and effect sequence or all are concurrent effects of a common set of underlying factors, another plausible and significant link should be noted. These classifications vary from time to time, and differ somewhat from those of other international agencies. Preview. From the late nineteenth century to World War I, the foreign trade of most developed countries expanded more rapidly than per capita income. Here, Kuznets sought to characterize differences in the industrial structure of rich and poor nations in the late 1940s. As already noted, the stock of data and of economic analysis is far poorer for these countries than that for the developed countries – a parallel to the smaller relative supply of material capital. However, some of them are listed, because they contribute to our understanding of the distinctive problems of economic life in the world today. 1. However, the execution of that plan was delayed by US involvement in World War II and Kuznets's duties as the chief statistician at the War Production Board. Simon Kuznets, a Russian-American development economist and statistician, was awarded the 1971 Nobel Memorial Prize in Economics for his research on … These efforts will also uncover some so far unmeasured positive returns – in the way of greater health and longevity, greater mobility, more leisure, less income inequality, and the like. The underlying data are from Everett E. Hagen and Oli Hawrylyshyn, “Analysis of World Income and Growth, 1955-1965”, Economic Development and Cultural Change, vol. Limitations of space prevent the presentation of a documented summary of the quantitative characteristics commonly observed in the growth of the presently developed countries, characteristics different from those of economic growth in earlier epochs. Some implications8 I turn now to a brief discussion of some social implications, of some effects of modern economic growth on conditions of life of various population groups in the countries affected. It did not require the invention of national income accounting to demonstrate that the United States was becoming increasingly well-to-do. Several preliminary findings, or rather plausible impressions, may be noted. The dynamic drives of modern economic growth, in the countries that entered the process ahead of others, meant a reaching out geographically; and the sequential spread of the process, facilitated by major changes in transport and communication, meant a continuous expansion to the less developed areas. Such a framework is not easily or rapidly attained, as evidenced by the long struggles toward it even in some of the presently developed countries in the nineteenth and early twentieth centuries. Read reviews from world’s largest community for readers. Quite the contrary: the available data indicated that high rates of growth in per capita income were positively related to population growth, although the sample size was not large enough to establish statistical significance. Send-to-Kindle or Email . United Kingdom. Urbanization and secularization come easily to mind as components of what sociologists term the process of modernization. For a discussion of the economic epoch concept see Simon Kuznets, Modern Economic Growth: Rate, Structure, and Spread, Yale University Press, New Haven, Conn., 1966, pp. This he found at the Social Science Research Council (SSRC) with funding supplied by the Rockefeller Foundation. The sketch above draws upon the results of many and widely varied studies in many countries, most of them economically developed; and the discussion reflects a wide collective effort, however individual some of my interpretations may be. 18, no. 4. Does the acceleration in growth of product and productivity in many developed countries in the last two decades reflect a major change in the potential provided by science-oriented technology, or a major change in the capacity of societies to catch up with that potential? Emergence of a modern framework for economic growth may be especially difficult if it involves elements peculiar to European civilization for which substitutes are not easily found. Kuznets's final task for the bureau was a monograph that integrated the various sectoral studies into an integrated overview of the marshaling of capital for economic growth: Capital in the American Economy. For more than a century, these academic institutions have worked independently to select Nobel Laureates in each prize category. But the rate of succession of such innovations was clearly more rapid in modern economic growth, and provided the base for a higher rate of aggregate growth. The learning of new skills and the declining value of previously acquired skills was clearly a costly process – to both the individuals and to society. I, Institut de Sociologic, Université Libre de Bruxelles, Brussels 1968, Tables D-4 and C-4). 1. 3 Dec 2020. These policies ranged from the imposition of colonial status to other limitations on political freedom, and, as a result, political independence and removal of the inferior status of the native members of the community, rather than economic advance, were given top priority. All rights reserved. Since the output of agriculture increased more rapidly than population and the share of the labor force in agriculture declined, labor productivity in agriculture was rising. Whatever the weight of the several factors in explaining the failure of the less developed countries to take advantage of the potential of modern economic growth, a topic that, in its range from imperialist exploitation to backwardness of the native economic and social framework, lends itself to passionate and biased polemic, the factual findings are clear. Although this process ground to a halt during the Great Depression of the 1930s, it resumed after the close of World War II. exploitable by more developed nations, that yields a large and increasing rent. These will, in turn, change the conditions under which the innovation exercises its effect on human welfare, and raise further problems of adjustment. Simon Kuznets is best known to the public for the Kuznets curve, which describes the relationship between The eighth entry in the series reported that the distribution of income in the 1950s was more equal in rich countries than in poor countries. For the less developed countries the tasks of economic research are somewhat different: the great need is for a wider supply of tested data, which means essentially data that have been scrutinized in the process of use for economic analysis. Main Modern Economic Growth. Or the mass application of a major invention may produce unexpected dis-economies of a scale that could hardly be foreseen in the early phases of its diffusion. This monograph was not the first time that Kuznets had shown the relative importance of intersectoral shifts in total economic growth. Is it a way of recouping the loss in standing, relative to such a leader as the United States, that was incurred during the depression of the thirties and World War II? INTRODUCTION MODERN economic growth, as revealed by the experience of the developed countries since the late eighteenth or early nineteenth century, reflects a continuing capacity to supply a growing … Yet in recent years there has been rapid accumulation of data for many less developed areas, other than those that, like Mainland China, view data as information useful to their enemies (external or internal) and are therefore either not revealed by government or possibly not even collected. In this work Kuznets identified a new economic era—which he called “modern economic growth”—that began in northwestern Europe in the last half of the eighteenth century. Mitchell's unwillingness to have the bureau sponsor his project, which Burns later rejected out of hand, led Kuznets to seek other auspices. In other words, many production plants in developed countries can be viewed as laboratories for the exploration of natural processes and as centers of research on new tools, both of which are of immense service to basic and applied research in science and technology. Pages: 538. Mitchell was not enamored of a project that aimed to quantify the similarities and differences in the long-term growth patterns of a score of industrialized nations. I hesitate to formulate them explicitly, since the data and the stock of knowledge on which the observations rest are limited. Two points are relevant here. An invention or innovation may prove far more productive, and induce a far wider mass application and many more cumulative improvements than were dreamed of by the inventor and the pioneer group of entrepreneurs. Its cumulative effects, all new, extend over a long period and result in an enormous transformation of economic production and of production relations. In many cases these negative results were allowed to accumulate and to become serious technological or social problems because it was so difficult to foresee them early enough in the process to take effective preventive or ameliorative action. Even if we disregard the threatening exhaustion of natural resources, a problem that so concerned Classical (and implicitly even Marxian) economics, and consider only early urbanization, one major negative effect was the significant rise in death rates as population moved from the more salubrious countryside to the infection-prone denser conditions of unsanitary cities. The demands of the data meant that his study of growth would be focused on the score or so of nations that had achieved high levels of industrialization by the mid-twentieth century. Second, the growth position of the less developed countries today is significantly different, in many respects, from that of the presently developed countries on the eve of their entry into modern economic growth (with the possible exception of Japan, and one cannot be sure even of that). The less developed areas that account for the largest part of the world population today are at much lower per capita product levels than were the developed countries just before their industrialization; and the latter at that time were economically in advance of the rest of the world, not at the low end of the per capita product range. But at least one implication is sufficiently intriguing, and seems to be illuminating of many recent events in the field, to warrant a brief note. Many of the points touched upon in this section are discussed in greater detail in Simon Kuznets, Economic Growth of Nations: Total Output and Production Structure, Harvard University Press, Cambridge, Mass., 1971, particularly in Chapter II (pp. The developed countries include most countries with per capita GDP of $1000 or more and Japan, but exclude those small countries with a high GDP per capita that is due to exceptional natural endowments (e.g. The continuous disturbance of pre-existing relative position of the several economic groups is pregnant with conflict – despite the rises in absolute income or product common to all groups. Critical Review 5. This conclusion influenced a great number of scholars, for whom the correlation asserted by Kuznets became the criterion by which they judged their own assumptions and results. Twelve laureates were awarded a Nobel Prize in 2020, for achievements that have conferred the greatest benefit to humankind. Developments in urban sanitation and food processing and the substitution of automobiles for horse-drawn vehicles had led to dramatic declines in the prevalence of deadly infectious diseases. Another finding was that high rates of population growth did not undermine the growth of per capita income, as some neo-Malthusians believed. One was the deceleration in growth rates after World War I—not only among the losers but also among the winners—which he attributed to institutional destabilizations produced by the war. But this and other services of the national state may be costly in various ways, of which intensified nationalism is one and other effects are too familiar to mention. Modem Economie Growth, Rate, Structure and Spread, Simon Kuznets, New Haven and London Yale University Press, 1966, 529 pages. But the nature and implications of this sequence were certainly not apparent in the 1920’s, when passenger cars began their mass service function in the United States. in the character of participation in economic activity, in the social values, and in the new pressures on deviant members of society. The estimates for the Communist countries have been adjusted to conform to the international GDP concept. 3. The topic continued to be vigorously debated into the 1960s and beyond. Consequently, effective participation in the modern economic system by the labor force necessitates rapid changes in its location and structure, in the relations among occupational status groups, and even in the relations between labor force and total population (the last, however, within narrow overall limits). The significant aspect here is that the surprises cannot be viewed as accidents: they are inherent in the process of technological (and social) innovation in that it contains an element of the unknown. Despite intriguing analytical problems that these few fortunate countries raise, we are interested here only in the nations that derive abundance by using advanced contemporary technology – not by selling fortuitous gifts of nature to others. Kuznets: Economic Growth and Income Inequality (1955) August 25, 2015 The Point: This paper from 1955 his of historical importance in the study of inequality. RESEARCH-DRIVEN INSIGHTS ON BUSINESS, POLICY, AND MARKETS, © 2020 CHICAGO BOOTH REVIEW. Even more significant is the concentration of the population at the low end of the product per capita range. Considering that it took centuries for the share of the agricultural sector in the labor force to decline to 50 percent in any sizable country (i.e. The sovereign state, with authority based on loyalty and on a community of feeling – in short, the modern national state – plays a crucial role in peacefully resolving such growth-induced conflicts. The rather violent changes in these structures that occurred in those countries that have forged ahead with highly forced industrialization under Communist auspices, the pioneer entry going back over forty years (beginning with the first Five-year Plan in the U.S.S.R.), are conspicuous illustrations of the kind of social invention and innovation that may be involved. It would be an oversimplification to argue that these innovations in the social and political structures were made primarily in response to the strain between economic backwardness and the potential of modern economic growth; or to claim that they were inexorable effects of antecedent history. But to whatever the struggle for political and social organization is a response, once it has been resolved, the results shape significantly the conditions under which economic growth can occur. 75-98), which deals with the non-conventional costs of economic growth, and Chapter VII (pp. Kuznets rejected all these options in favor of the nation-state because the available data were organized and maintained by sovereign states. To be sure, their common failure to exploit the potential of modern economic growth means several specific common features: a low per capita product, a large share of agriculture or other extractive industries, a generally small scale of production. 04.07.2008 Katharina M ller Economic History before the Industrial Revolution 3 6. Noté /5: Achetez Modern Economic Growth (Study in Comparative Economics) de Kuznets, Simon: ISBN: 9780300001464 sur amazon.fr, des millions de livres livrés chez vous en 1 jour The text revolved around the discussion of thirty-one very detailed tables. Indeed, to push this speculative line further, one can argue that all economic growth brings some unexpected results in its wake, positive as well as negative, with the latter taking on greater importance as the mass effects of major innovations are felt and the needs that they are meant to satisfy are met. MEG 4. If the rates of aggregate growth and the speed of structural transformation in the economic, institutional, and perhaps even in the ideological, framework are SO much higher than in the past as to represent a revolutionary acceleration, and if the various regions of the world are for the first time in history so closely interrelated as to be one, some new major growth source, some new epochal innovation, must have generated these radically different patterns. Categories: economics. These technological advances were so remarkable, he concluded, that they could not be matched again in the next decade. As already noted, the conventional measures of national product and its components do not reflect many costs of adjustment in the economic and social structures to the channeling of major technological innovations; and, indeed, also omit some positive returns.
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