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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 10: Growth or Development?

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Economy textbooks, in general, discuss the growth phenomenon in the light of full employment (the Neoclassical School) or underemployment (the Keynesian School) equilibrium models. In recent years, the rediscovery22 of the “endogenous” growth models, have led to attempts to overcome a vicious circle which has proved fruitless and for many years lead to the presumption that technology is a “given” factor in economics. It is an obvious fact that, despite all the refinements in content or scope, the traditional or “utopian” academic models have not found any realistic solutions to the real economic growth problems of the developing countries. Therefore, as a necessity, in addition to these “utopian” academic growth models, a new and distinct study of economic analysis emerged under the name of the “Development Economics” which was used to analyze and solve the specific problems of the developing countries.

When one scrutinizes the academic economic textbooks, one concludes that the similarities and distinctions between growth and development have not been successfully addressed. According to some theorists, growth means an “increase in the total income of the developed countries”, while development implies a “growth in the total income of the less-developed countries”. Sometimes, in order to achieve development the emphasis is placed on a long-run successive production rise. For others, growth implies a long-term rise in per capita production or a rise in the production capacity at a level of full employment.

According to Todaro, a notable theoretician of Development Economics, mainstream neoclassical economy deals...

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