Growth and Resilience Theory: A new way of conceptualising convergence dynamics.

Kerstins Rum Session 4: Historical national accounts organized by Svante Prado and Kerstin Enflo (session moved to Stora Salen)


Anthony Smythe


Why do some countries develop while others stagnate? Recent evidence suggests the historic fundamental change for economic progress seems to not have been high growth rates, but compound growth through the elimination of negative growth episodes, i.e., ‘shrinking’. All economies seem to be able to grow, but few countries have been able to drastically improve their shrinking patterns, which has underpinned the divergence often argued in literature. However, whilst growth theory does not consider the role of shrinking, shrinking has not yet clearly defined itself from growth processes, leaving shrinking research more generally indistinguishable from classic growth economics. To solve these research gaps, Growth and Resilience Theory proposes growth processes to be those with the ability to shift a production function up whereas building resilience is the ability to move through a production function, specifically by guarding against backsliding. Long-run convergence is an economy’s ability to balance their growth- and resilience-based institutions to maximise the space under their respective production function. Thus, a ‘Goldilocks Area’ of long-term development patterns is proposed that would categorise a successful catch-up experience whilst still leaving room for context specific factors and potentially heterogenous institutional make-ups.


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