Economic Growth Theory: A Tail of Two Paradigms

This paper outlines the conceptual problem, which lies behind the research program, "Technological Change as a Determinant of Sustainable Growth: A Case Study of the Philippines" currently being undertaken by the author at the School of Economics. It shows how current growth theory tends to tail or follow two quite distinct physics models - one of thermodynamic equilibrium the other of non or rather far-from-equilibrium thermodynamics. These perceptions of growth are dramatically different, the first seeing changes in industry structure as one of the epiphenomena of growth and not central to it. The second model sees such structural change as central to the process of growth; indeed growth itself is held to emanate from structural changes which in turn is the outcome of technological change. The apparent contradictions in these alternative perceptions of growth are ignored in practice, both being used simultaneously to measure structural change within an economy. By examining an economy which although showing a quite reasonable rate of growth in the 50s 60s and 70s but nevertheless has shown an extremely low rate of productivity increase, it is hoped to cast some light on which of these perceptions of growth appears to be the more meaningful.