Essay Example on Theory History and the Origins of Modern Economic

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Why Indeed in America Theory History and the Origins of Modern Economic Growth Growth without history First of all article says that the models of growth were studied not by the way of looking in the history of economics but by looking in the data of different countries for 30 years or might be even more number of years It was said that Neoclassical theory explains economic growth in the best way meaning by more representative conclusion and in an extreme cases it was said that the education and saving rate was the things which caused the differences which were found however the technological development was the same all over the world However in Britain compared with the US there were higher salaries and it doesn't seem that education and saving rate can explain this as the years of education were almost the same Also there is a question of why investments which Britain people made were mostly going to US why it was more attractive if the education level was almost the same it seems that the technological development had an effect meaning that it might have been more developed in US compared the Britain because it can be clearly noted that saving rate and educations levels does not explain why salaries in US were higher and the thing with investment Therefore it might be argued that the technological development should also be considered but actually it wasn t 2 History of Theory In this part of article it says that this part does recognise the value of economic history but denies the need for formal theory

Thus it says that there no actual need in considering the formal theory for example if consider the case with car and how it moves without using the formal theory we just it just moves because it moves but by using the formal theory of Dawkins which is called hierarchical reductionism which says that we need to take all the available information which is given in this case this information is car and the theory says that we need to divide into parts to make the life easier to understand how the car works and moves without making such simplification it would be actually impossible to say how it moves but by dividing into parts like wheels engine and other staff which is in the car it becomes easy to explain to someone how it works and moves therefore we are in need to use the formal theory 3 Neoclassical versus New Growth Theory It can be said that the New Growth Theory is better because with the case of Neoclassical theory it goes to dead end with the case of technology because neoclassical theory only relates to the things which live in models but with the case of capital it obvious clear that it can be understand using the machine tools but this is not the case with technology and it is therefore impossible to understand Meaning take it as given Whereas the New Growth Theory first started with the technology as the public good and worried were it came from but then economics changed the split in the physical world and divided the world into simpler parts which are ideas and things

The case with olives where the untasty olives oils in conjunctions with something else becomes tasty olives then there is a economic growth which arises from founding new recipe which avoids the problem of understanding of technology where the neoclassical theorists went to dead end 4 Why in America The resources which were available to US as well as the scale effects meaning that they had large population compared with other countries gave a great deal of advantages for example if the new product was created by using the technologies or by any other methods it was developing really fast because population is large meaning that it is consumed it large quantities and therefore developed even faster therefore the US became the leading country in the world in most production parts compared with other countries which had large GDP with small population and even if these small countries produced something because of the scale they were not able to develop as fast as US It can be said that scale effects in US is not the only interesting part of the story of America and historians would agree that they ve known it already But the new thing will be introduction of scale effects putting it in higher hierarchy as it might be said fundamental aspect of economy of the world which clearly follows from the nontrivial character of ideas For new growth economists they should divide the physical part of the world into rival and nonrival ideas and should divide world into smaller parts in order to give more convincing answer of why in America industrial growth was the first In conclusion it can be said that history of economics should be considered when we are dealing with different kind of issues and that there is a necessity for considering the formal theory which is really important New Growth Theory economists were also right in changing from technology into physical world to some extent and also America became the leading country of the world because it had large amount of population which gave a boost to its economy and its first industrial growth


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