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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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Chapter 1: Growth Process Worldwide

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Historically, we see that countries perform at different growth rates. Two hundred years ago the gap between development and income amongst countries was not as huge as it is today (see Figure: 1-1). The estimate of GDP per capita in 1700 showed that per capita income everywhere the world was very similar. There were small differences between the US, China and India. From 1700 until 1820, almost no change in world GDP per capita occurred. (See Vasquez;2003;90).

Figure: 1-1 World per capita GDP*



Source: A. Maddison, Monitoring the World Economy: 1820-1992 in Vasquez, I.0 (2003), Kapitalizm ve Küresel Refah, p. 90, Figure: 5.1. * quoted from the Turkish version of the book.

During the 1700s, differences in productivity growth began to occur; compared to China, Japan and Russia, per capita income in Europe and the US almost doubled. The economic boom of the 19th century tripled the living standards in Europe and quadrupled them in the USA (Vasquez;2003;90).

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