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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 7: Long-run Groth in the Real Economy


In the short-run growth models in Chapter-6, the technology employed (T) in production and the qualification level of the laborer (Ln) was assumed to be a “given”. From now on, we shall focus on a case where the “creative” labor (Ly) enters the picture and paves the way for long-run growth by introducing “new” technology. In other words, the long-run growth takes place due to the technological innovations and the improvements in the qualifications of the laborers.

In Chapter-2 of this book, the concept of “technological productivity growth” or simply “long-run growth” refers to growth due to innovations. Now, we have a new dimension; “new technology” or “technological progress”. In contrast to a “given” product and a “given” method of production, the “new technologies enable us to consume a wider range of “new” products or buy the “given” products at a lower price due to cost-reducing “new” methods of production.

The long run growth will be studied under two headings, see Table: 7-1, as in Chapter-2, but this time the analysis will be more detailed. We start first with refreshing our minds shortly on the technological productivity growth concept.

Table: 7-1 Long-run growth

“Given” product-new production method

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