Alternative theories of growth and the Italian case
Keywords:Italy, growth rate differentials, labour supply, economies of scale, Italian experience, elasticity, convergence
In this brief survey, the three most recent contributions to the discussion of growth rate differentials are considered. All three, using different arguments, arrive at the conclusion that such a disparity should be considered as exceptional. Some argue, on the one hand, that the highest growth rates have been reached thanks to a very elastic labour supply. On the other hand, it has been maintained that the highest growth rates attained in the postwar period can be explained as being due to exceptional opportunities for the reallocation of resources and economies of scale. Using the recent Italian experience, the author argues that these assumptions of convergence are somewhat dubious. Rather, in the long run, fast growing countries will likely reach a stage at which the sectors with a low productivity level will begin to increase again. It is for this reason, more than for the effects of the elasticity of the labour supply, that the convergence of the growth rate assumption would appear to be confirmed.
JEL: J22, J20, O11, O40