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Economic Growth and Development

Theories, Criticisms and an Alternative Growth Model

Hasan Gürak

Mainstream economic theories today are logical, consistent and even explanatory in many ways, when their relevance is tested in real economic situations, they often fail to correctly explain normal economic transactions. Thus they are only successful in explaining a fictional world and fictional economic relations that are largely based on unrealistic assumptions. Economic Growth is a study of new and alternative theories and models to replace the parables of these mainstream ideologies and hopes to appeal to open minded economists as a constructive contribution for the further development of new economic ideas.
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← 14 | 15 →Introduction


Let’s go back in time 60 years. Few homes had a TV-set. There were few TV-channels. Transmission was in black-and-white. Nowadays, we are hard put to find any home; even in the less developed countries that hasn’t got a TV-set. Now we have multi-channel, “smart”, color T.V.s. Communication systems have mushroomed. Sixty years ago you were lucky to have a “land-line”. Today, almost everyone has a “mobile”, if not a “smart phone”. High quality communication through the internet is a fact of daily life. Automobiles, airplanes and household appliances are all becoming “smart”. As we write, there is a “totally computerized” car being presented at the Istanbul motor show that doesn’t need a driver!

Today’s consumers enjoy the use of an immense variety of products that are of an unprecedented quality. “New” products are continuously being developed and introduced into the markets. In the developed countries, an increasingly large part of a person’s income is being spent on unessential items. Items that we “want” but don’t “need”! This signifies an increased per capita or nationwide prosperity.

The critical questions are: Why do countries grow? Why do they grow at different rates? What is the role of “labor” or “human capital” or “capital” or “technological progress” in this process? Why is the income gap between the relatively richer and relatively poorer countries not converging? How could the development gap between countries converge?

Until Solow’s “re-discovery” of the vital role played by technological progress in growth...

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