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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 3: Growth Theories: Historical Perspective

Extract

Growth has been one of the subjects keenly studied by economists for many centuries. We can see these developments with their titles in the following diagram.

Figure: 3-1 Development of growth theories in retrospect



No contemporary economist is expected to object to the contribution of either technological innovation or the laborers’ qualifications, i.e., human capital, in the growth process. Almost all of the “new” growth theories already incorporate at least one of these principles of production, and most of the time incorporates them both. Recognizing technological innovation created by intellectual labor as the main determinant behind countries’ growth adds a new dimension to both value-price theory and the classical definition of capital. In this respect, it is possible to claim that the key input that leads to the welfare growth of a country is ← 57 | 58 →‘knowledge’, more specifically, the knowledge required for production. When we consider that the source of this knowledge is ‘creative’ intellectual labor, then qualified labor appears as both the most important input of production and a value creating resource. To put it differently, it is the labor force that produces the technology as well as uses it.

Now, let’s look at how some economists evaluate technological innovation and qualifications of the labor force in their analyses of growth.

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