Empirical Analysis of Kaldor’s Growth Law: The Sample of OECD Countries

Dilek KUTLUAY ÅžAHÄ°N

Fiscaoeconomia, 2025, issue 3

Abstract: Nicholas Kaldor has made important contributions to forming and developing the foundation of Post Keynesian economics. The industrial growth model is a fundamental contribution of Nicholas Kaldor to economic theory. Kaldor's growth law has a significant place in the economic growth literature. Kaldor laws explore the relationships between the industrial sector, economic growth, and labor productivity. According to Kaldor's law of growth, the economy's growth rate is positively related to the increase in production in the manufacturing industry sector. Kaldor stated that the engine of economic growth is the industrial sector. In this study, the validity of Kaldor's first law was analyzed using the panel data method for 38 OECD countries (the USA, Canada, the UK, Australia, Belgium, Austria, Chile, Czech Republic, Colombia, Estonia, Costa Rica, Denmark, Germany, Finland, Hungary, France, Ireland, Greece, Iceland, Israel, Portugal, Italy, Lithuania, Korea Rep., Latvia, Luxembourg, Mexico, Norway, Netherlands, New Zealand, Japan, Poland, Slovakia, Switzerland, Slovenia, Sweden, Spain, and Türkiye). 1997-2020 annual data were used in the study. According to the analysis, Kaldor law is valid for OECD countries. This result revealed in the analysis reveals that the industrial sector is very important for economic growth. Therefore, since the industrial sector is so important in economic growth, policies that will encourage the development of the industrial sector should be implemented.

Keywords: Kaldor's Law; Economic Growth; Panel Data Analysis (search for similar items in EconPapers)
JEL-codes: L60 O11 O40 O47 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:fis:journl:250319

DOI: 10.25295/fsecon.1620352

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