The main traditional views on the sources and determinants of economic growth and their defects

(empty) try to describe the main traditional views on the sources and determinants of economic gro

The main traditional views on the sources and determinants of economic growth and their defects

(empty) try to describe the main traditional views on the sources and determinants of economic growth and their shortcomings.

Views on the sources and determinants of economic growth can be divided into many schools. These schools include: (1) capital determinism represented by Harold-Thomas model. As we pointed out when we introduced the theory of economic development, the Rhodes-Thomas economic growth model essentially believes that if there are certain demand conditions, the only bottleneck of economic growth is capital, so the key to economic growth is rapid capital accumulation. When the capital-output ratio remains unchanged, economic growth mainly depends on the savings rate, that is, the level of capital accumulation. (2) Technological determinism represented by Solow's economic growth model. It is believed that the decisive factor of economic growth is not the speed and scale of capital accumulation, but the degree of technological progress. This theory especially emphasizes the expansion of division of labor and the great role of technological progress in economic growth. (3) Human capital determinism. This theory divides the basic elements of modern economic growth into two basic forms, one is tangible material capital and the other is intangible human capital. It is considered that tangible material capital is an important and indispensable factor affecting modern economic growth, but it is not the most critical factor. The decisive factor of economic growth and development is human capital, not tangible capital. Human capital can be expressed by "knowledge" with increasing income, which can offset the negative impact of diminishing marginal income of capital on economic growth and realize sustained and long-term economic growth. (4) Institutional determinism. In addition to the above theories, the institutional economics school believes that the decisive factor of economic growth is the change and innovation of economic system. According to this theory, both capital determinism and technology determinism are only influencing factors of economic growth, but not decisive factors of economic growth, and efficient economic organization is the key to economic growth.

Defects: Harold-Thomas economic growth model, which simply emphasizes the decisive role of capital accumulation in economic growth, has proved to be unable to stand the test of practice and has been severely criticized by economists and policy makers in most developing countries. Solow's economic growth model emphasizes the great role of technological progress, but regards technological progress as an "exogenous variable" determined outside the economic system, which limits its insight and application value. In addition, these economic growth theories are almost all based on the assumption of diminishing returns from factor scale.

[Analysis] This question examines the theory of economic growth.