Theory of Economic Growth [1° ed.] 0415407087, 9780415407083

Table of contents :
Cover
Title
Copyright
PREFACE
Contents
I. INTRODUCTION
1. DEFINITIONS
2. METHODOLOGY
3. LAYOUT
Bibliographical Note
II. THE WILL TO ECONOMIZE
1. THE DESIRE FOR GOODS
(a) Asceticism
(b) Wealth and Social Status
(c) Limited Horizons
2. THE COST OF EFFORT
(a) The Attitude to Work
(b) The Spirit of Adventure
3. RESOURCES AND RESPONSE
Bibliographical Note
III. ECONOMIC INSTITUTIONS
1. THE RIGHT TO REWARD
(a) Non-Material Rewards
(b) The Management of Property
(c) The Reward for Work
2. TRADE AND SPECIALIZATION
(a) Advantages
(b) The Extent of the Market
(c) Organization
3. ECONOMIC FREEDOM
(a) Individualism and Collective Action
(b) Vertical Mobility
(c) Freedom of Markets
4. SOME CASES
(a) Religion
(b) Slavery
(c) The Family
(d) The Organization of Agriculture
(e) Cottage Industry
5. INSTITUTIONAL CHANGE
(a) The Process of Change
(b) The Cycle of Change
Bibliographical Note
IV. KNOWLEDGE
1. THE GROWTH OF KNOWLEDGE
(a) Pre-scientific Societies
(b) Invention and Research
2. THE APPLICATION OF NEW IDEAS
(a) The Attitude towards Innovation
(b) Knowledge and Profit
3. TRAINING PROGRAMMES
(a) Priorities
(b) Agricultural Extension
(c) Industrial Aptitudes
(d) Business Administration
Bibliographical Note
V. CAPITAL
1. CAPITAL REQUIREMENTS
2. SAVINGS
(a) The Need for Savings
(b) Domestic Sources
(c) External Finance
3. INVESTMENT
(a) The Institutional Framework
(b) Point of Departure
(c) Stability
(d) Secular Stagnation
Bibliographical Note
VI. POPULATION AND RESOURCES
1. POPULATION AND OUTPUT
(a) Population Growth
(b) Size and Output
(c) Occupations
2. INTERNATIONAL RELATIONS
(a) International Trade
(b) Migration
(c) Imperialism
Bibliographical Note
VII. GOVERNMENT
1. THE FRAMEWORK OF ENTERPRISE
(a) The Functions of Government
(b) Production Programmes
2. THE PUBLIC SECTOR
(a) Public Expenditure Programmes
(b) The Fiscal Problem
3. POWER AND POLITICS
(a) Roads to Stagnation
(b) Background to Statesmanship
Bibliographical Note
APPENDIX IS ECONOMIC GROWTH DESIRABLE?
(a) The Benefits of Economic Growth
(b) The Acquisitive Society
(c) Problems of Transition
INDEX

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ISBN:9780415407083

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ROlttledge Library Editions

THE THEORY OF ECONOMIC GROWTH

ECON OMICS

Routledge Library Editions - Economics DEVElOPMENT ECONOMICS In 7 Volumes

II III IV

V VI VII

Western Enterprise in Far Eastern Economic Develop ment A/lm \X'estern Enterprise in Indonesia and Malaya A/lm Econom ic Analysis and Policy in Underdeveloped Countries Baller The Condicions of Agricultural Growth BQserllp Development Planning Lewis Overhead Costs Lewis The Theory of Economic Growth Lewis

THE THEORY OF ECONOMIC GROWTH

W ARTHUR LEWIS

i~ ~~~~r~~~~~p LONDON AND NEW YORK

First published in 1955

Reprimed in 2003 by Routledge 2 Park Square, !\ofilton Park, /\bingdon, Oxon, OX 14 4RN Transferred to Digital Printing 2006

Routledge iJ all illlprillt of the 'raJ/or & Frallch GroilP All rights reserved. No part of this book may be reprimed or reproduced or utilized in any form or by any electronic, mec hanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information StOrage or retrieval synem, without permission in writing from the publishers. The publishers ha\'e made every effort to contact authorslcopyrighr holders of the works reprimed in R()f(tledge Libra/)' EdiliQIIJ - EC()1lomics. This has not been possible in every case, however, and we would welcome correspondence from those individualslcompanies we have been unable to trace. These reprims are taken from original copies of each book. In many cases the condition of these originals is not perfect. The publisher has gone to great lengths to ensure the quality of these reprints, but wishes to point out that certain characteris tics of the orig inal copies will, of necessity, be apparent in reprints thereof. Britisb Librn,.y Cnta/ogllhlg ill Publimtio/l Data A CIP catalogue record for rhis book is available from the British Library

The Theory of Economic Growth ISBN 10: 0415407087 ISBN 13: 978041 5407083 Miniset: Development Economics Series: Routledge Library Editions - Economics Printed 3nd bound by CI'I Amony Rowe. Eastbourne

THE THEORY OF

ECONOMIC GROWTH by W. Arthur Lewis Stanley Jevans Pro fessor of Political Economy in the University of Manchester

George Allen & Unwin LId RUSKIN HOUSE MUSEUM STREET LONDON

FIRST PUBLISHED 1955 SECOND u.tPRESSiDN 1956

THIRD IMPRESSION 1957 FOURTH IMPRESSION 1960

This book is copyright uflder Ihe Beme COflvefll;o/l , Apart Irom OflY lair dealiflgs lor Ihe purpose 01 pr/f'ate study. reUQrch, crilil'i1m or review, /U permitted under the Copyright Act 1956, no /XIrliofl m4Y be reproduced by any process wiThouT writ/en permission. Enquiry should be made TO the publisher

PREFACE The purpose of this book is not to present original ideas on its subject, but to try to provide au appropriate framework for studying economic development. The place for original ideas is articles in the technical journals, and my articles on this subject are listed in the bibliographical notes. A book of this kind seemed to be necessary because the theory of economic growth once more engages worldwide interest, and because no comprehensive treatise on the subject has been published for about a century, The last great book covering this wide range was John Stuart Mill's Principles of Political Economy, published in 1848. After this economists grew wiser; they were too sensible to try to cover such an enormous field in a single volume, and they even abandoned parts of the subject altogether, as being beyond their competence. It is partly irrepressible curiosity and partly the practical needs of contemporary policy·makers that have driven me to range over this enormous area; but I suppose it is also mainly an excess of courage that has permitted me to offer to a critical public a book whose subject matter is so vast that most of it must inevitably be treated superficially. My title is misleading ifit suggests that there can be a single theory of economic growth. The factors which determine growth are very numerous, and each has its own set of theories. There is not much in common between the theories which one uses in studying land tenure, or the diffusion of new ideas, or the trade cycle, the growth of po pula· tion, or the government's budgets. 'Theories' of economic growth might have been a more appropriate title, but it would have been just as misleading in suggesting that the book set out to review the literature of economic growth. What I have done is to make not a theory, but a map. So many factors are relevant in studying economic growth that it is easy to be lost unless one has a general perspective of the subject. This also is my excuse for superficiality. Maps are published in many different scales. for many different purposes. The articles in the technical journal correspond to a scale of an inch to the mile. This book is on a scale more like an inch to a hundred miles; this too should have its uses. The same combination of curiosity and of practical need which drove me to this subject has also determined the shape of the book. Curiosity den:ands a philosophical enquiry into the processes of human history, w~i l e practical need demands a handbook of things to do. Since I am equally interested in both. what I have written will suit neither those who care only for philosophy, nor those who want to know precisely what to do next. It seems inevitable that a book

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PREFACE

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