Economics 314

Macroeconomic Theory
Jeffrey Parker, Reed College 
Paper of the week

Assigned paper

Abramovitz, Moses. 1986. Catching Up, Forging Ahead, and Falling Behind. Journal of Economic History 46 (2):385-406.

Reading suggestions

  • There is not even a single equation in this paper! Not much that I should need to help you understand ...
  • The neoclassical framework that we have studied assumes that capital is homogeneous and technology is "disembodied"—an improvement in technology (A) increases the productivity of new and old machines equally. Abramovitz describes a world in which new technologies are embodied in new capital. This creates a distinction between capital of newer (more productive) and older (less productive) vintages. [A model with embodied technological progress is explored in Romer's Problem 1.12 and in the papers he cites in that problem.]
  • The productivity levels in Tables 1 and 2 are labor productivity (Y/L), not "total-factor productivity" (the relationship between Y and an index of all inputs). Capital deepening of the neoclassical kind (increases in k) would increase labor productivity even if A were unchanged.

Questions for analysis

  1. Neoclassical growth models have strong convergence results based on accumulation of capital by countries that are initially below their steady-state capital/labor ratios. On a theoretical level, how are the mechanisms of Abramovitz's "catch-up hypothesis" similar to and different from neoclassical convergence?
  2. On an observational level, how are the outcomes (in terms of countries' growth paths) of the catching-up process discussed by Abramovitz similar to or different from the outcomes we would observe from neoclassical, capital-deepening convergence?
  3. What does Abramovitz mean by "social capability" and why does he think it is important for growth?
  4. At the time that Abramovitz wrote, both China and India were poor, slow-growth economies. Since then, they have (to differing degrees) "taken off." Have the social capabilities of these economies changed since the 1980s and, if so, how have these changes been related to their growth experiences?