Statistical Evidence of Balanced and Unbalanced Growth

Abstract

Listen

Translate article

JN recent years we have witnessed mounting controversy regarding balanced and unbalanced growth as competing policy objectives. Increasingly active theoretical discussions and political concern with this aspect of economic growth warrants a probe into the development experience of different countries. The virtual neglect, so far, of empirical investigation 1 into the nature and process of sectoral growth-rate dispersion can be partly explained by the paucity of relevant data and partly by the fact that precise operational concepts required for the study of the problem have not yet evolved. The purpose of this paper is to present sectoral growth-rate imbalances of different countries as related to the process of national overall development. Our concern will be with the dispersion of sectoral growth rates and their relation to the over-all growth rate on the one hand and to the level of national development on the other. For this purpose cross-sectional and time-series analyses have been used employing such data as are readily available. The various alternative versions of the doctrine of balanced growth (the uniformity concept of balance, the income elasticity concept of balance, etc.) are presented in section III and empirically tested. However, before embarking on this task, it is necessary to postulate the relationship between the over-all growth rate and the sectoral growth rate and specify precisely the nature of the variables entering into the postulated relationship. This is done in section II. Countries are classified according to their pattern of growth in section IV and the broad conclusions as to the relationship between the level of national development and sectoral are listed in section VI. It may be mentioned at the outset that the study is not meant to examine the causes of balanced and unbalanced growth. Sectoral or imbalance is taken as given. The affect of sectoral balance or on a country's over-all rate of growth is what is being investigated. In order to examine, with any thoroughness, the effects of variations in sectoral growth rates on the over-all growthrate, we must remove from consideration the causes of sectoral imbalance. It may also be mentioned that the present study does not take into account the affect of foreign trade on sectoral growth rates. Nurkse holds that