Growth and Adjustment in Developing Countries: A Gap Model Approach

Lance Taylor, Richard H. Day and Kumaraswamy Velupillai

Chapter 11 in Nonlinearities, Disequilibria and Simulation, 1992, pp 199-216 from Palgrave Macmillan

Abstract: Abstract In the spirit of most of the chapters in this book, economic development should be viewed as a dynamic process, described by a dissipative system of differential equations with high dimensionality and many nonlinearities. In Joseph Schumpeter’s (1934) language, the economy would normally be in circular flow, but the nature of that flow could alter dramatically at any time, in a phase change or bifurcation. The differential equations would have diverse basins and attractors for their trajectories, some corresponding to what Simon Kuznets (1966) called ‘modern economic growth’, and others not. Development, as Schumpeter’s concept might be interpreted, is a diversion of a trajectory of circular flow towards an attractor, around which exponential growth of output per head is feasible under socially stable relationships of production and patterns of income distribution.

Keywords: Foreign Exchange; Capacity Utilization; Money Demand; Capital Inflow; National Saving (search for similar items in EconPapers)
Date: 1992
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DOI: 10.1007/978-1-349-12227-1_11

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