The New Palgrave Dictionary of Economics

2018 Edition
| Editors: Macmillan Publishers Ltd

Balanced Growth

  • Jonathan Temple
Reference work entry
DOI: https://doi.org/10.1057/978-1-349-95189-5_453

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.

Keywords

Balanced growth Big Push Coordination failures Development strategies Economic geography Economies of scale Hirschman, A. Increasing returns Industrialization Krugman, P. Multiple equilibria Nurkse, R. Pecuniary external economies Rosenstein-Rodan, P. Scitovsky, T. Solow, R. Swan, T. Unbalanced growth 

JEL Classifications

O4 
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Copyright information

© Macmillan Publishers Ltd. 2018

Authors and Affiliations

  • Jonathan Temple
    • 1
  1. 1.