Does modern endogenous growth theory adequately represent Allyn Young?

Authors: Chandra, Ramesh; Sandilands, Roger J.

Source: Cambridge Journal of Economics, Volume 29, Number 3, May 2005 , pp. 463-473(11)

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Abstract:

Endogenous growth theory is now fashionable. It seeks to explain why per capita income growth in capital abundant countries is often faster than in capital poor countries and defies the operation of diminishing returns. This theory, which took off with Romer and Lucas, often makes Allyn Young's concept of increasing returns and Marshall's distinction between internal and external economies its starting point but considers their treatment of the subject as not sufficiently rigorous. The modern endogenous growth theorists then claim to explain what they had in mind with greater clarity, rigour and depth. This paper argues that this is not the case as these theorists actually misrepresent Young in important ways.

Keywords: Endogenous growth; Increasing returns; Cumulative causation; Classical growth theory; Allyn Young

Document Type: Research article

DOI: http://dx.doi.org/10.1093/cje/bei005

Affiliations: 1: Department of Economics, University of Strathclyde, Glasgow. The authors are grateful to two anonymous referees for helpful comments and constructive criticisms

Publication date: 2005-05-01

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The Cambridge Journal of Economics, founded in 1977 in the traditions of Marx, Keynes, Kalecki, Joan Robinson and Kaldor, provides a forum for theoretical, applied, policy and methodological research into social and economic issues.