Course: Modern Societies in Transition 2010, Summary Seminar 9

What are the key characteristics of modern economic growth by Kuznets?

1. high rates of growth of per capita product and of population
2. the rate rise in productivity is high
3. the rate of structural transformation of the economy is high
4. rapid changes in the structures of society and its ideology
5. increased propensity of developed countries to reach out to the rest of the world
6. spread of modern economic growth is limited to small part of the world with the potential of modern technology

Kuznets lists six of them: the first two refer to economic and technical advance, the second two point to related changes in economic structure, society and ideology; the last two say something about the world distribution of growth.

Which role do the individual characteristics play in defining modern economic growth?

The first two which refer to economic and technical advance are marking quantitative characteristic of modern economic growth. The high rates of growth of per capita product and of population emerge as result of advancing technology which based on emergence of modern science. With rather stable ratio of labour force to total population and with average hours of work declining, it means still higher growth rates in product per man hour. This acceleration of productivity cause rapid shift in underlying production (economic) structure and also changes other aspect of society. Two important groups of effects are: (i) urbanization, internal migration from countryside to cities with its cost of social values, character of economic activity, denser life in city. (ii) Shift in relative shares in the economy of the specific population groups attached to particular production sectors. There might be a decline in relative position of one group after another for example farmers. Sectors as agriculture are well known to become relatively poorer during economic growth, because of the limited income elasticity of demand of agricultural good compare to industrial good.

The social structure also associated with rapid changes for example in family formation, in man’s views on his role and the measure of achievement. The dynamic drives of modern economic growth in the countries that entered the process ahead of others, meant a reaching out geographically, facilitated by major changes in transportation and communication, meant a continuous expansion to the less developed areas. At the same time less developed countries are in unfavourable position since they have not been able to achieve levels of modern economic growth comparing with developed countries. This has some causes. First, modern economic growth demand stable but flexible political and social framework, capable of accommodating rapid structural change and resolving conflicts it’s generated; developing countries are still struggling with such frameworks.  The second cause is that organizations in developed countries constructed policies towards other part of the world while introducing some element of modern economic growth, were malevolent for economic development as a whole, for example CAP, protection regulation. Other factor for continuing backwardness of developing countries is that although technological knowledge and innovations are available to leapfrog into modern economic, the stock of innovations most suitable to the needs of less developed countries is less abundant. Thus, we find continuity of unequal modern economic growth.

How do they relate to the properties of techno-economic paradigms and technological revolutions defined by Perez?

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