Q1: Does Kuznets pattern always appear in the development process of countries?			:1 FAQID:646
: global,
InputDate: 7/9/2006
Reference: Hayami, Yujiro. Development Economics, From the Poverty to the Wealth of Nations, Second Edition, Oxford University Press. p146-147
A: Based on the review of growth-accounting studies a summarized in the previous section, Kuznets characterized the 'modern economic growth' of Western economies since the Industrial Revolution as predominantly dependent on sustained improvements in technology rather than capital accumulation.
Historically totally different growth pattern existed
The growth accounting studies, such as those summarized by Kuznets in the Table in the previous section are mostly based on data of Western economies since the fourth quarter of the nineteenth century, when those economies had already progressed to an advanced stage of industrialization. Recent attempts to extend growth-accounting analysis back to the period of the Industrial Revolution and earlier suggest that a markedly different pattern of economic hrowth had existed before emergence of the pattern dominated by the growth in tatal factor productivity.
Abramovitz study for U.S.
Existence of an economic growth pattern heavily based on capital accumulation rather than on technological progress in the early stage of industrialization was suggested by Abramovitz (1993) from his extension of the growth-accounting analysis back to the beginning of that century. Results of his accounting for labour productivity growth are summarized in a simplified form in the upper section of the Table.
Marx pattern appeared for Perios 1 and 2
For the two early period (1800-55 and 1855-90), contribution of growth in TFP to growth in labour productivity were exceede by those of the capital-labour ratio, implying increase in the capital-output ratio. Moreover, the income share of capital increased significantly from 0.34 in Period 1 to 0.45 in Period 2. SUch a grouth pattern is akin to Marx's theory of capitalist economic development.
Marx pattern corresponds to the take-off and early industrialization phase
If we tentatively assume that the Industrial Revolution emerged in the United States around the 1840s and 1850s, Period 1 and Period 2 in ABramovitz's time demarkations may correspond with transition to 'take-off' and a 'drive to maturity' in the terminology of Rostow (1960). Alternatively, Period 1 might be called 'a transition to initial industrialization', and Perios 2 'a transition to the advanced stage of industrialization'. Abramovita results suggest that a growth pattern analogous to the Marx pattern did emerge in the US economy before the newly born industrial economy reached 'maturity'
Marx patter replaced by Kuznets pattern when US economy reached advanced stage of industrialization
Futher, Abramovitz's data indicate that the Marx pattern was replaced by the pattern of modern economic growth as summarized by Kuznets (henceforce called the Kuznets pattern) after the economy reached the advanced stage of industrialization. Indeed, from Perios 3 (1890-1927) to Period 4 (1929-66) both the income share of capital and capital-output ratio decreased. The contribution of TFP growth jumped from 36 per cent in Period 2 to 70 per cent in Period 3, and firther to 78 per cent in Period 4 - typical of advanced industrial economy.
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Reference:
Abramovits, M. (1993) The search for the SOurce of Growth: Area of Ignorance, Old and New, Journal of Economic History, 53 (June): 217-43
Rostow, R.R.(1960). The Stages of Economic Growth: A Non-Communist Manufesto (Cambridge: Cambridge University Press).
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