Classical Economic Growth:An analysis in the tradition of Adam smith

This is the first book to treat classical economic growth, as derived from the work of Adam Smith, in a modern analytical fashion. The themes discussed are firmly rooted in the tradition of classical growth analysis; the methods and concerns are modern. The necessary background in classical economics and growth theory is provided to make the book self contained. Then a modern approach is applied to the central themes of classical economic growth analysis: technical change, the division of labour, capital accumulation, thriftiness, the competitive process, increasing returns, sectoral disequilibrium, and the functional distribution of income. The book develops a sequence of models, developing numerous new results. This sequence starts with growth and accumulation at the industry level, moves to fluctuations and growth at the aggregate level, and then the bargaining power of capital, and de-skilling, are analysed in an aggregate model. A sectoral disequilibrium analysis, which emphasizes the role of increasing returns and extends the work of Allyn Young and Nicholas Kaldor, is provided. The book concludes by relating classical growth analysis to the problems of a modern post-industrial economy

Mature Micro-Firms and their Experience of Funding Shortages

Funding shortages are analysed in the context of a simple neoclassical model of the micro-firm that uses financial capital for its operations. It predicts that a response to funding shortages is to substitute part-time workers for full-time workers, under the assumption that the latter are the more financial capital intensive employees. The experience of funding gaps in finance capital by long-lived micro-firms is investigated using data which were obtained by telephone interviews. The micro-firms examined had an average size of six full-time and two part-time workers, and an average age of fifteen years. Using probit estimators of the probability of experiencing funding shortages it is found that a strong and significant negative association exists between the number of part-time workers and the probability of experiencing funding shortages, refuting the simple neoclassical hypothesis, and suggesting an alternative hypothesis, emphasising the flexibility advantages of part-time employees in averting funding shortages. A ten per cent increase in part-time employees is shown to reduce the probability of experiencing funding shortages by two and a half per cent. A regional effect was also discovered, and bivariate probits gave results which were consistent with univariate probits.</p

Free Trade, Business Strategy and Globalization

This paper links the economist's analysis of free trade with the business strategist's analysis of the forces behind the globalization of competition. It argues that, although the drive to globalization may seem different from the seeking of superior outcomes in competitive markets, this may be only because the modern reference point for competition is inappropriate. However, reference to classical ideas of competition shows that both the advantages of globalization, and its disadvantages, had been anticipated by classical writers of the eighteenth century, most notably by Adam Smith. That argument is supported with two main lines of reasoning. The first identifies globalization as the most recent stage in a process of stadial development. The second links global business strategy to the analysis of competition as a dynamic process in classical economics. These two ideas are combined, to provide the basis for a 'cumulative causation' argument. In this approach, expansion of production, innovation, and increasing returns, are mutually reinforcing, causing a progressive spiral of growth. However, it is pointed out that the same process can cause 'vicious circles' as well as 'virtuous circles'. If demand starts to stagnate, this tendency can be self-reinforcing, with firms who are not industry leaders going to the wall, and a tendency to monopolisation asserting itself. Thus the process of globalization needs to be guided; the 'virtuous circle' is not a necessary outcome