The latter can only be conjectured, but reasonable estimates for Western Europe over the long period from the early Middle Ages to the mid-nineteenth century suggest that the modern rate of growth is about ten times as high for product per capita (see Simon Kuznets, Economic Growth of Nations: Total Output and Production Structure, Harvard University Press, Cambridge, Mass., 1971, pp. 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 … 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. 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. And the growth of the US population from just a few million at the time of the Revolution to more than 100 million people early in the twentieth century was also obvious. 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. To begin with the latter, the major effects of which, e.g. This is true also of electric power, the internal combustion engine, atomic energy, the application of short rays to communication and computation, the inventions resulting in such new industrial materials as steel, aluminum, and plastics, and so on through a long list that marked modern economic growth. Pages: 538. It did not require the invention of national income accounting to demonstrate that the United States was becoming increasingly well-to-do. Preview. Not only do they provide a larger economic surplus for basic and applied research with long time leads and heavy capital demands, but, more specifically, they permit the development of new efficient tools for scientific use and supply new data on the behavior of natural processes under the stress of modification in economic production. During the decade following World War II, when Simon Kuznets began to lay out his research agenda for studying and explaining the high, long-term rates of economic growth, he was aware of the persistent tendency of keen observers to underestimate the capacity for continuing technological advances. And one may argue that this source is the emergence of modern science as the basis of advancing technology – a breakthrough in the evolution of science that produced a potential for technology far greater than existed previously. 3. First, the negative effects of growth have never been viewed as so far outweighing its positive contribution as to lead to its renunciation – no matter how crude the underlying calculus may have been. The major breakthroughs in the advance of human knowledge, those that constituted dominant sources of sustained growth over long periods and spread to a substantial part of the world, may be termed epochal innovations. 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. 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. Kuznets set out to gather statistics on the growth of nations over a period of at least a half century in order to have secular trends dominate short-term cycles. A technological innovation, particularly one based on a recent major invention, represents a venture into the partly unknown, something not fully known until the mass spread of the innovation reveals the full range of direct and related effects. Simon Kuznets - Prize Lecture: Modern Economic Growth: Findings and Reflections, The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 1971. This continuity is important particularly when we find that, except for Japan and possibly Russia, all presently developed countries were well in advance of the rest of the world before their modern growth and industrialization began, enjoying a comparative advantage produced by pre-modern trends. To illustrate: we can today follow easily the sequence from the introduction of the passenger car as a mass means of transportation, to the growth of the suburbs, to the movement of the more affluent from the city centers, to the concentration of lower income recipients and unemployed immigrants in the slums of the inner city core, to the acute urban problems, financial and other, and to the trend toward metropolitan consolidation. At the same time, the difficulty of making the institutional and ideological transformations needed to convert the new large potential of modern technology into economic growth in the relatively short period since the late eighteenth century limited the spread of the system. 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? To cite this section Modern Economic Growth Simon Kuznets. Né à Pinsk (Biélorussie), il quitte en 1922 l'Union soviétique naissante pour les États-Unis et poursuit ses études à l'université Columbia. 9. 2. This he found at the Social Science Research Council (SSRC) with funding supplied by the Rockefeller Foundation. ), even their parameters are bound to be variable; and many specific characteristics will be so dependent upon the outcome of the social and political innovations that extrapolation from the past is extremely hazardous. 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. Copyright 2013 The University of Chicago. 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. Preview. Categories: economics. The seventh entry in the series dealt with the share and composition of national product. Since economic engagement represents a dominant influence in the life of people, the shift in the share of a specific sector, with its distinctive characteristics and even mode of life, affects the population group engaged in it. The country had been largely electrified, and a host of household appliances was available to improve the efficiency of home production (refrigerators, washing machines, vacuum cleaners) and to provide low-cost entertainment (radios, phonographs, televisions). But how to proceed? Nor is the social technology that evolved in the developed countries likely to provide models of institutions or arrangements suitable to the diverse institutional and population-size backgrounds of many less developed countries. 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. Conclusion . Vaccines, penicillin, and other powerful medicines were widely available to deal with once-fatal diseases. For purposes of analysis, Kuznets sometimes divided the economy into twelve sectors and sometimes compressed those sectors into three, that he identified as A (agriculture, forestry, and fishing), M (manufacturing, mining, and construction), and S (transportation, communications, commerce, public utilities, government, and other services). 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. To cite examples from modern economic growth: steam and electric power and the large-scale plants needed to exploit them are not compatible with family enterprise, illiteracy, or slavery – all of which prevailed in earlier times over much of even the developed world, and had to be replaced by more appropriate institutions and social views. Thus, modern technology with its emphasis on labor-saving inventions may not be suited to countries with a plethora of labor but a scarcity of other factors, such as land and water; and modern institutions, with their emphasis on personal responsibility and pursuit of economic interest, may not be suited to the more traditional life patterns of the agricultural communities that predominate in many less developed countries. 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. An invention is a major one if it provides the basis for extensive applications and improvements (e.g. Of course, this is not the only economic function of the state: it can also stimulate growth and structural change. The second monograph in the "Quantitative Methods" series was subtitled "Industrial Distribution of National Product and Labor Force." In that modern economic growth has to contend with the resolution of incipient conflicts continuously generated by rapid changes in economic and social structure, it may be described as a process of controlled revolution. 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? 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. However, during the first half of the twentieth century, the rate of growth of labor productivity among developed nations was generally much more rapid in the M and S sectors than in the A sector. Modern Economic Growth | Simon Kuznets | download | B–OK. Read reviews from world’s largest community for readers. 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. If the argument is valid, modern economic growth, with the rapid succession of innovations and shortening period of their mass diffusion, must be accompanied by a relatively high incidence of negative effects. Nevertheless, in the 1950s, the specter of the Great Depression still haunted economists and policymakers, who worried that the postwar boom would peter out, like air escaping from a balloon, and the country would be returned to the clutches of secular stagnation. tion data as adjusted in Simon Kuznets, Shares of Upper Groups in Income and Savings (New York, 1953), p. 220. 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. Main Modern Economic Growth. Lecture to the memory of Alfred Nobel, December 11, 1971 (This abstract was borrowed from another version of this item.) Noté /5: Achetez Modern Economic Growth de Kuznets, Simon: ISBN: 9780300006469 sur, des millions de livres livrés chez vous en 1 jour 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. The data had to be capable of being decomposed in various ways (such as economic sectors and subsectors) in order to study structural changes in the economy during the course of economic growth. In September 1943, when it was clear that peak wartime production goals had been attained and planning had turned to the transition back to a peacetime economy, Kuznets wrote to Wesley Mitchell, laying out his research plans for after his return to civilian life. It is also important because it emphasizes that distinction among economic epochs is a complicated intellectual choice and that the continuation of past trends and their changing patterns over time are subjects deserving the closest attention. File: PDF, 33.73 MB. Urbanization and secularization come easily to mind as components of what sociologists term the process of modernization. Download books for free. Even if we allow for the impressive accumulation of capital, in its widest sense, the growth rate of productivity is high, and, indeed, mirrors the great rise in per capita product and in per capita pure consumption. Economic social classes? Modern Economic Growth book. 10-27). In a comprehensiv e analysis of th quan­ titative characteristics of économie growth, Mr. Kuznets illuminâtes the basic features of the modem économie epoch. 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. 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. 04.07.2008 Katharina M ller Economic History before the Industrial Revolution 3 6. You can write a book review and share your … 1. Simon Kuznets, a Russian-American development economist and statistician, was awarded the 1971 Nobel Memorial Prize in Economics for his research on … Modern Economic Growth 4. Modern Economic Growth: Rate, Structure and Spread. 4. MLA style: Simon Kuznets – Prize Lecture. In some cases, these conflicts did break out into overt civil war, the Civil War in the United States being a conspicuous example. These technological advances were so remarkable, he concluded, that they could not be matched again in the next decade. The implied acceleration in the growth rate of total product is between forty and fifty times. Nobel Media AB 2020. 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. In 1955, Simon Kuznets published a paper asserting that the correlation between economic growth and income inequality resembles an inverted U-shaped curve. Needless to say, the element of the uniquely new, of exploration into the unknown, was also prominent in pre-modern times, since innovations in knowledge and technology are the pre-requisites for any significant growth. MEG 4. 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. Since the latter reflects the realized effects of advancing technology, rapid changes in production structure are inevitable – given the differential impact of technological innovations on the several production sectors, the differing income elasticity of domestic demand for various consumer goods, and the changing comparative advantage in foreign trade. Simon Kuznets is best known to the public for the Kuznets curve, which describes the relationship between 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. En 1971, il reçoit le « Prix Nobel » d'économie pour ses travaux empiriques en économie de la croissance. Some small countries can provide increasing income to their populations because they happen to possess a resource (minerals, location, etc.) of output per unit of all inputs, is high, even when we include among inputs other factors in addition to labor, the major productive factor – and here too the rate is a large multiple of the rate in the past.4 Third, the rate of structural transformation of the economy is high. Modern Economic Growth Simon Kuznets. Save for later . Lecture to the memory of Alfred Nobel, December 11, 1971. Ethnic subgroups? 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. There is a striking contrast, e.g., in terms of population size, between the giants like Mainland China and India, on the one hand, and the scores of tiny states in Africa and Latin America; as there is between the timing of direct Western impact on Africa and of that on many countries in Latin America. 1. It will not be a matter of merely borrowing existing tools, material and social; or of directly applying past patterns of growth, merely allowing for the difference in parameters. But the much augmented transportation and communication power of developed countries in the nineteenth century permitted a much greater and more direct political dominance over the colonies, the “opening up” of previously closed areas (such as Japan), and the “partition” of previously undivided areas (such as sub-Saharan Africa). Mass application of technological innovations, which constitutes much of the distinctive substance of modern economic growth, is closely connected with the further progress of science, in its turn the basis for additional advance in technology. Mitchell's unwillingness to have the bureau sponsor his project, which Burns later rejected out of hand, led Kuznets to seek other auspices. Although this process ground to a halt during the Great Depression of the 1930s, it resumed after the close of World War II. This brief summary of two quantitative characteristics of modern economic growth that relate to aggregate rates, two that relate to structural transformation, and two that relate to international spread, supports our working assumption that modern economic growth marks a distinct economic epoch. The series Simon Kuznets, 1901-1985 Faculty members of the Economic Growth Center at Yale founded the Simon Kuznets Memorial Lecture Series in 1986. II, International Tables (New York, 1970), notes to Table 5, p. 156. The basic organization of Kuznets’ Modern Economic Growth parallels the theoretical structuring of economic study in Alfred Marshall’s Principles of Economics and harkens back to John Stuart Mill’s Principles of Political Economy — production, allocation of resources, income distribution, consumption, and external relations. Japan is the only nation outside of those rooted in European civilization that has joined the group of developed countries so far. Kuznets devoted two subsequent entries in the monograph series to the contribution of capital formation to economic growth. Even when the technological innovation is an adaptation of a known technique by a follower country, the results may not be fully foreseeable, for they represent the combination of something known, the technology, with something new, an institutional and ideological framework with which it has not previously been combined. Netherlands Antilles, Puerto Rico, Kuwait, and Qatar). Agenda 2. 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. Kuznets, Simon, 1973. The earlier theory that underlies these measures defined the productive factors in a relatively narrow way, and left the rise in productivity as an unexplained gap, as a measure of our ignorance. Economic growth perforce brings about a decline in the relative position of one group after another – of farmers, of small scale producers, of landowners – a change not easily accepted, and, in fact, as history teaches us, often resisted. One of his principal findings was that rich countries saved more than poor countries (both in cross section for recent years and over time). Please login to your account first; Need help? Obviously, this aspect of modern economic growth deserves our greatest attention, and the fact that the quantitative data and our knowledge of the institutional structures of the less developed countries are, at the moment, far more limited than our knowledge of the developed areas, is not reason enough for us to ignore it. excluding small “city enclaves”), a drop of 30 to 40 percentage points in the course of a single century is a strikingly fast structural change. Reprinted with permission from Political Arithmetic: Simon Kuznets and the Empirical Tradition in Economics, by Robert W. Fogel, Enid M. Fogel, Mark Guglielmo, and Nathaniel Grotte, published by the University of Chicago Press. 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. All three components of the definition are important. 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. 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. And the variants even of Communist organization, let alone those of democracy and of non-Communist authoritarianism, are familiar. In the seven chapters presented here noted economist and Nobel Prize–winner Simon Kuznets summarizes the results of his studies of the economic growth of nations in modern times. Sources 1. 1, Part II, October 1969. Mar 05, 2014. Definitions A country’s economic growth may be defined as a long-term rise in capacity to supply increasingly diverse economic goods to its population, this growing capacity based on advancing technology and the institutional and ideological adjustments that it demands. 4. Other examples, in the early periods of industrialization among the currently developed countries, or, for that matter, more recently within some less developed countries, are not lacking. 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. The records of many developed countries reveal examples of resolutions of growth conflicts, of payments for overcoming resistance and obstacles to growth, that left burdensome heritages for the following generations (notably in Germany and Japan). First, the changes in conditions of life suggested by “urbanization” clearly involved a variety of costs and returns that are not now included in economic measurement, and some of which may never be susceptible to measurement. Simon Kuznets was awarded the 1971 Nobel Prize in economics for his empirically founded interpretation of economic growth, yet, two decades after his death it is only in the guise of the “Kuznets curve ” that he may be found in the literature of growth or of economic development. This portion of the monograph series relied on data collected by the United Nations. 35 and 38). 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. Consumption was also promoted by the decrease in the inequality of the income distribution. 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.