Abstract
‘Balanced growth’ has at least two different meanings in economics. In macroeconomics, balanced growth occurs when output and the capital stock grow at the same rate. This growth path can rationalize the long-run stability of real interest rates, but its existence requires strong assumptions. In development economics, balanced growth refers to the simultaneous, coordinated expansion of several sectors. The usual arguments for this development strategy rely on scale economies, so that the productivity and profitability of individual firms may depend on market size. The article reviews the balanced growth debate and the extent to which it has influenced development policies.
This chapter was originally published in The New Palgrave Dictionary of Economics, 2nd edition, 2008. Edited by Steven N. Durlauf and Lawrence E. Blume
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Temple, J. (2008). Balanced Growth. In: The New Palgrave Dictionary of Economics. Palgrave Macmillan, London. https://doi.org/10.1057/978-1-349-95121-5_453-2
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DOI: https://doi.org/10.1057/978-1-349-95121-5_453-2
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Publisher Name: Palgrave Macmillan, London
Online ISBN: 978-1-349-95121-5
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Chapter history
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Latest
Balanced Growth- Published:
- 20 March 2017
DOI: https://doi.org/10.1057/978-1-349-95121-5_453-2
-
Original
Balanced Growth- Published:
- 09 November 2016
DOI: https://doi.org/10.1057/978-1-349-95121-5_453-1