To assess the quality of the articles we checked the number of citations through Google Scholar and the impact factor through Web of Science’s Journal Citation Reports. The highest quality article is “A Contribution to the Theory of Economic Growth” by Solow,R.M. in the Quarterly Journal of Economics, with 24375 citations and with a journal impact factor of 6,662.The second comes the “Economic Growth and Income Inequality” by Kuznets,S. in the American Economic Review. The last article is “A model of Economic Growth” by Kaldor,N.
in “The Economic Journal”, with only 2682 citations and a journal impact factor of 2,609. Economic growth is the most crucial concept when it comes to understanding the economy of a country. The topic of economic growth is developed by many famous economists such as Solow, Kaldor, and Kuznets. The Solow model is the most relevant approach nowadays.
In his article, Solow begins by briefly describing some of the characteristics of the Harrod-Domar model, which he agrees with, except of the assumption of fixed proportions. Solow’s starting point is capital accumulation. He gives the example of Cobb-Douglas production function whose properties are the constant returns to scale and diminishing marginal productivity. He argues that the only possible equilibrium of output to labour and capital to labour ratios is reached when net investment becomes zero, this is also called the steady state.
Solow also takes into account the population growth which is added to the production function and this yields a new steady state where output and capital grow are at the same rate as labour. But adding population growth does not explain the growth in GDP per capita, that is why he multiplies the production function by an increasing scale factor which is the technological progress (A). Finally, Solow unlocked the secret of growth per capita which is a growth at the rate of the technological progress. In the end he also mentions some of the elementary obstacles to full employment like rigid wages and liquid preferences, policy implications, uncertainty, etc.(Solow,1956) In the other hand, we have the model of economic growth of Nicholas Kaldor which was based on Keynesian techniques of analysis developed by Harrod but with some differences.
His purpose was to represent the actual rate of progress with simple functional relationship rather than working with constants. He assumed that in a growing economy the short period supply of aggregate goods is inelastic and not limited by effective demand. He based this theory in one the Keynesian assumption of “full employment”. He also introduced the term of “new knowledge” and said that the growth of technological progress depends by the rate of capital accumulations which was also explained by Solow.
According to Kaldor the productivity of labour is increasing, the interest rate has been stable and that the monetary policy plays a passive role to it. Finally, Kaldor worked in his model in two stages called “Constant working population” and “Expanding Population”. (Kaldor,1957) Kuznets believes that there is a strong relationship between economic growth and income inequality. He begins by stating that due to scarce data and other factors there might be difficulties to answer important questions regarding the topic.
He firstly discusses trends of income inequality in developed countries such as United States, England and Germany. When these countries entered the process of growth there was more widespread income inequality but it seems that this inequality was reduced in the later phases. Kuznets indicates that one important factor of inequality is the shift from agricultural to non-agricultural sectors and it is also related with population growth and migration. Then he makes a comparison between developed and poor countries believing that the latter has a sharper inequality which is followed by a much lower level of average income per capita. Kuznets concludes that in order to go further in the understanding of this subject, political and social economy need to be studied also. (Kuznets, 1955)In conclusion, the importance of economic growth phenomenon is significant to every country and to its standards of living.
That is why despite already developed and relevant theories, it is still a topic widely discussed with regard to its causes and effects in every country’s long run path. Reference List:1.Solow, R. M. (1956). A contribution to the theory of economic growth.
The quarterly journal of economics, 70(1), 65-94.