Immiserizing growth
Encyclopedia
Immiserizing growth is a situation first proposed by Jagdish Bhagwati
, in 1958, where economic growth
could result in a country being worse off than before the growth. If growth is heavily export
biased it will lead to a fall in the terms of trade
of the exporting country, in rare circumstances this fall in the terms of trade may be so large as to outweigh the gains from growth, this situation would cause a country to be worse off after growth than before. This result is only valid if the growing country is able to influence world prices. Harry G. Johnson had, independently, worked out conditions for this result in 1955. There is a strong correlation between immiserizing growth and the export of primary goods
in developing countries
.
Most economists now regard the concept of immiserizing growth as more a theoretical point than a real-world issue.
Jagdish Bhagwati
Jagdish Natwarlal Bhagwati is an Indian-American economist and professor of economics and law at Columbia University. He is well known for his research in international trade and for his advocacy of free trade....
, in 1958, where economic growth
Economic growth
In economics, economic growth is defined as the increasing capacity of the economy to satisfy the wants of goods and services of the members of society. Economic growth is enabled by increases in productivity, which lowers the inputs for a given amount of output. Lowered costs increase demand...
could result in a country being worse off than before the growth. If growth is heavily export
Export
The term export is derived from the conceptual meaning as to ship the goods and services out of the port of a country. The seller of such goods and services is referred to as an "exporter" who is based in the country of export whereas the overseas based buyer is referred to as an "importer"...
biased it will lead to a fall in the terms of trade
Terms of trade
In international economics and international trade, terms of trade or TOT is /. In layman's terms it means what quantity of imports can be purchased through the sale of a fixed quantity of exports...
of the exporting country, in rare circumstances this fall in the terms of trade may be so large as to outweigh the gains from growth, this situation would cause a country to be worse off after growth than before. This result is only valid if the growing country is able to influence world prices. Harry G. Johnson had, independently, worked out conditions for this result in 1955. There is a strong correlation between immiserizing growth and the export of primary goods
Primary goods
Primary goods are presented in the important book A Theory of Justice written by the american philosopher John Rawls.Rawls identifies primary goods as the “things that every rational man is presumend to want”...
in developing countries
Developing country
A developing country, also known as a less-developed country, is a nation with a low level of material well-being. Since no single definition of the term developing country is recognized internationally, the levels of development may vary widely within so-called developing countries...
.
Most economists now regard the concept of immiserizing growth as more a theoretical point than a real-world issue.