Cumulative Causation, Harrod’s Trade Multiplier, and Kaldor’s Paradox: The Foundations of Post-Keynesian Theory of Growth Differentials

The exploration of the links between productive specialization, technological innovation and growth in an open economic system has been constantly (and often passionately) pursued since the very beginning of modern economic thought. One of the controversial issues in the ‘great debates’ between free traders and protectionists, convergence and cumulative causation theorists, paladins of a world laissez-faire and proponents of a new economic order and, more recently, between endogenous growth theorists, is if and how economic growth is dependent on productive specialization and, should that be the case, if and how the latter could be enhanced or modified through innovation.