Modeling of Economic Growth Vis-a-Vis Modeling of Economic Development: Dichotomies Characteristic of General Equilibrium

Abstract

It is well established that economic growth that is funded, in entirety, by technical change equates to economic development. This study provides formal theoretical evidence that production functions inherently always are inappropriate to modeling of economic development. In stated respect, modeling of economic development requires unraveling of a function that is not well defined, that is, not `one-to-one' from a topological space that is composition of the topological space for real GDP Per Capita and topological space for income inequality - a proxy for beneficial (respectively, detrimental) effects of arrival (respectively, non-arrival) of technical change - to the topological space for economic development. Modeling (of economic development) necessarily transpires in context of choice under uncertainty, because economic agents, all of whom are rational can, in presence of shortfalls to estimates for technical change that facilitate full employment embark on substitution of `government largesse' for technical change as source of employment and growth. Uncertainty as to each of future realizations for technical change, and choices to transpire domiciles modeling of economic development in context of choice under uncertainty, as such rationalizes transformation of similar amounts of growth into heterogeneous realizations of economic development. An important fallout of study findings is inference of integrity of models of neoclassical or endogenous growth theory, all of which arrive at necessity of determinism of evolution of technical change for success at workouts of models of economic growth. Study findings reiterate importance of searches for new approaches to modeling of economic development.