The Economics of Demand‐led Growth: Challenging the Supply‐side Vision of the long run

Abstract

This volume is a collection of essays developing growth theory from the demand‐side instead of the conventional supply‐determined growth paradigm. Besides general discussions of the role of demand in the long run, the contributions fall in the Kaldorian and Kaleckian traditions, with a section on the relationship between structural change and demand‐led growth. The supply‐side neo‐classical propositions that demand has only a transitory impact on the utilisation of resources and that the development of these resources (and hence potential output) over time is independent of demand are mere abstractions that have been well challenged by Setterfield in the introduction. If the goal of growth theory is to show the mechanism of growth taking note of the demand side, then the neo‐classical growth theory (so‐called endogenous growth with technological progress augmented by human capital) falls short. Two questions follow from this: (i) without effective demand how does one talk of actual growth, since the upper limit to potential growth can keep changing in line with demand growth; (ii) is it sensible to talk about ‘endogenous’ growth while leaving demand side out of the picture? In other words, the expansion of productive capacity cannot take place without a prior expectation of an appropriate demand growth.

Cite this work

No public copy is stored for this record, so only the metadata is cited.

Stored only when both papers are in the corpus — 110 citations exist upstream.