A Test for Balanced and Unbalanced Growth

Author(s): Pan A. Yotopoulos and Lawrence J. Lau

Source: The Review of Economics and Statistics , Nov., 1970, Vol. 52, No. 4 (Nov., 1970),
pp. 376-384
Published by: The MIT Press

Stable URL: https://www.jstor.org/stable/1926314

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 A TEST FOR BALANCED AND UNBALANCED GROWTH

Pan A. Yotopoulos and Lawrence J. Lau *

A LTERNATIVE strategies for economic causal link between imbalance and development
development have frequently invoked the in terms of external economies of vertical type
doctrines of balanced and unbalanced growth.' and in terms of decision-making which is in-
Policy recommendations in favor of balanced duced by disequilibria.3
or unbalanced growth are based on a priori The operational definition of the concept of
notions about the relationship between (lack balance or imbalance is probably the weakest
of) balance and the process of development. part in the formulation of the theory. In a
For balanced-unbalanced growth to become recent article Swamy [9] formulated the cri-
an empirical hypothesis, rather than a doctrine, terion of balance in terms of the dispersion of
it has to be formulated in a way that it is given sectoral growth rates and he tested the hypoth-
the chance to be proven wrong. An operational esis by correlating the resulting index with the
formulation involves three steps: balance (or overall rate of growth for an international cross
imbalance) is defined in an unambiguous way section and time periods between 1948-1960.
that renders itself to quantification; an observ- In this article we basically employ the same
able relationship between balance and economic operational framework, data sources and time
development is postulated; this observable re- periods with Swamy. The significant divergence
lationship is further specified by establishing in results is due to the more suitable index of
causality and by determining the flow of causa- imbalance and the more refined data set that
tion. we use. In section I we discuss the different
The hypothesized observable relationship be- variants of balanced-unbalanced growth and we
tween balance and economic development is introduce the appropriate for each measure of
sufficiently clear in the literature. The propo- dispersion. After a brief description of the
nents of the balanced growth theory specify data in section II, section III presents the
positive association between balance on the one evidence on the relationship between growth
hand and overall growth rate in national in- rates and indices of imbalance. In section IV
come (per capita). The relationship is reversed the indices of imbalance are related to the level
for the unbalanced growth theorists. of development, as determined by a country's
The discussion on causality between balance national income per capita. Finally, we draw
and development is less unequivocal. In gen- the conclusions from our analysis and we com-
eral, the flow of causation is supposed to run pare our results with parallel investigations.
from balance (or imbalance) to development.2
Two examples will suffice for illustrative pur- I Balanced-Unbalanced Growth and
poses. Nurkse [8] [31 advocates balanced Measures of Dispersion
growth on the grounds that it increases the
Solow and Samuelson [10] (after von Neu-
reinvestible surplus, it provides inducements to
mann) formulate the notion of balanced growth
invest, it creates external economies in comple-
in a way that becomes conducive to measure-
mentary industries and as a result it leads to
ment. This formulation, which also becomes
higher economic development. On the opposite
the starting point for Swamy, requires that
side of the field Hirschman [4] perceives the
. . . the output of each commodity increases or de-
* The authors are grateful to their colleagues Paul A.
creases by a constant percentage per unit of time, the
David and Bridger M. Mitchell for helpful comments on an
mutual proportions in which commodities are produced
early draft. Mr. Lin-Hsiung Chuang and Mr. Wuu-Long
Lin provided able computational assistance. However, we remaining constant. The economy changes only in scale,
still retain full equity rights on the remaining errors. but not in composition [10, p. 412].
1 For a review of the literature on balanced and un-
balanced growth see Sutcliffe [11]. 3A celebrated example of decision-making that is facili-
2Although Boulding [l] and perhaps even Kuznets [7] tated by imbalance is Hirschman's sequence of shortage-
would tend to view causality as going the other way - fromsurplus of "social overhead capital" and "directly productive
development to balance (imbalance). activities" [4].

[ 376 1

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 BALANCED AND UNBALANCED GROWTH 377
The criterion for balance (imbalance) that de-
rives from this uniformity notion of growth can
be formulated in terms of the degree of disper-
sion of sectoral growth rates and the overall
rate of growth over a certain time period.4 A
high degree of dispersion of sectoral growth
rates would define a high index of imbalance.
In turn, a positive relationship of the index of
imbalance with the observed rates of economic
growth over the period would constitute rejec-
tion of the balanced growth hypothesis.
What is an appropriate index of dispersion?
The Pearson Coefficient of Variation is a nat-
ural choice for this measure. It is defined as
the standard deviation divided by the mean.
However, the mean of the sectoral growth rates
is not in general equal to the overall growth
rate. Hence we use a modified version of the
Coefficient of Variation.5 We define
/n
1 X (gi - G)2
G n
where G is the average rate of growth of a
country over a given period and g, is the ith
sector's rate of growth.
The v measure of imbalance overlooks en-
tirely the relative share of each sector within
the economy. This is treacherous since, ob-
viously, a deviation of 100 per cent in the
growth rate of an industry that constitutes only
one per cent of the national income should be
considered as less unbalancing than a 20 per
cent deviation of an industry that constitutes
50 per cent of the national income. Conse-
quently the measure of dispersion should also
allow for the relative share of each sector. The
weighted index of imbalance is written as
1 / nw
V* = | wi (g - G)2 (2)
G =__1
4 The theory on balanced-unbalanced growth fails to
specify what is an applicable time interval for the test of
the hypothesis. In order to make our analysis comparable
to Swamy's we use the same twelve years (1948-1960)
within which we also distinguish three subperiods.
5Swamy defines the index of imbalance in terms of the
standard deviation and the mean absolute deviation. Ob-
viously these are inappropriate indices for the comparison
of the degree of dispersion of sectoral growth rates across
countries because different countries typically have noniden-
tical growth rates.
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n
where wi is the share of sector i and I = 1.
i=l
n
It can also be readily verified that X wigi C G.6
i=1
In our case wi can be estimated from the aver-
age ratio of the sector's value added to national
income in the period under consideration.7
Another variant of the notion of balanced
growth which is due to Nurkse [8] [3] ac-
counts for the income elasticity of demand.
The conceptual cornerstone of the doctrine of
balanced growth is that supply creates its own
demand, with the added proviso
. . that supply is properly distributed among differ-
ent commodities in accordance with consumers' wants.
An increase in consumable output must advance along
an expansion path determined by the income elasticity
of consumer demand for its [the sector's] product [3,
pp. 250-251].
By modifying (2) we define the index of vari-
ability that corresponds to the elasticity model
of imbalance as
1 H
V' w/(g - EJG)2 (3)
where El is the total incom
mand for sector i's output.8
We employ the three indices of imbalance for
the analysis of the dispersion of the sectoral
rate of growth relative to the overall rate of
growth. As another variant we may study the
dispersion of the rate of growth of the manu-
facturing subsectors relative to the growth rate
of the entire manufacturing sector. This focuses
on Nurkse's refinement of the balanced growth
hypothesis according to which a certain degree
of imbalance is more prevalent in the so-called
"vertical" sequences of manufacturing pro-
cesses [3, p. 268]. For this purpose, with nota-
tion of V", for the vertical (i.e., producer-
oriented industries) and V", for the horizontal
(i.e., consumer-oriented industries) versions of
6 Note that in this weighted form, the index of imbalance
coincides with the Coefficient of Variation.
7In the empirical analysis, w, is given by the ratio of
the arithmetic mean of the shares at the beginning and at
the end of the period over national income.
8 Ideally, these income elasticities should be specific to
each country. Unfortunately, comparable data on elasticity
are available only for a few countries. Hence it is assumed
in the empirical analysis that the income elasticities of de-
mand are the same across countries.
378 THE REVIEW OF ECONOMICS AND STATISTICS
the elasticity model of imbalance, respectively,
we write in general
V wim _ + !,W,M(gim - ElM GM)' (4)
where the subscript i refers to the manufac-
turing subsector and the subscript M to the
manufacturing sector as a whole.
II The Data
The data required are growth rates and in-
dices of imbalance for both global sectors and
the manufacturing subsectors. The indices of
imbalance, as defined in section I, are computed
from sectoral and manufacturing subsectoral
growth rates, value shares and income elastici-
ties of demand. The basic source of data is
United Nations, The Growth of World Indus-
try, 1938-1961, National Tables [14]. It
covers a number of countries, most of them for
the better part of the time-series from 1948-
1960. Data are available for six global sectors
which follow the International Standard Indus-
trial Classification: agriculture (0), mining (1),
manufacturing (2-3), construction (4), elec-
tricity-gas-water (5), and others (6, 8-9), i.e.,
transportation and communication, services,
etc. Within manufacturing, thirteen subsectors
are distinguished. We divide them in consumer
and producer-oriented industries on the basis
of the United Nations' classification [12, p.
12] .9 The consumer-oriented subsectors consist
of: food, beverages and tobacco (20-22), tex-
tiles (23), clothing and footwear (24), wood
products (2 5-26), printing and publishing (28)
and leather and leather products (29). The
producer-oriented subsectors are paper and
paper products (27), rubber products (30),
chemicals and petroleum (31-32), non-metallic
mineral products (33), basic metals (34), metal
products (35-38) and other manufacturing
(39).
The basic data provided in The Growth of
JVorld Industry are still a far cry from a body
of homogeneous, closely comparable inter-
country and inter-temporal output measures.
Therefore considerable refinement of the data
is necessary. For only thirty-two countries are
Swamy's classification is slightly different from ours in
that it includes with the consumer-oriented industries paper
and paper products, and rubber products.
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the sectoral and overall growth rates provided
consistently in constant prices for the period
1948-1960 or for at least one of the subperiods
that we distinguish (1948-1953, 1954-1958 and
1950-1960).10 It was necessary therefore to
compute overall and sectoral growth rates from
raw data on gross domestic product according
to origin. One can distinguish four categories
of countries for this operation. For eleven
countries in Group A '1 for which the raw data
are available in The Growth of World Industry
in current prices, we derived real growth rates
by deflating with the International Monetary
Fund deflators [5]. The data for five countries
in Group B 12 are available as the data for
countries in Group A, with the exception of
deflators. In these cases we procured deflators
from the national source of the data. In order
to supplement the data of the Growth of World
Industry we resorted to two alternative sources.
For fifteen countries in Group C we used the
raw data (deflated) from the United Nations
Yearbook of National Accounts Statistics
[13]. Finally, another three countries (Group
D) were added from data in United Nations,
Statistical Yearbook [ 15 ] 14 and in national sta-
tistical publications.'5 We thus complete an
international cross section that, for the sub-
period 1954-1958, includes a total of 65 coun-
tries. The data on the manufacturing subsec-
tors come from The Growth of World Industry
and there exist 25 observations for the sub-
period 1954-1958.
The rates of growth in GDP and manufac-
turing production and the relevant indices of
imbalance, as computed from the raw data
described above, are presented in the appendix
tables 1 and 2. They refer to an international
0 This goes partly to explain why Swamy's appendix
table 1A that presents his data consists of a mixture of real
output growth rates, growth rates of output valued at
current prices and in some instances, growth rates in em-
ployment.
" Canada, Republic of China, Ireland, Israel, Japan,
Netherlands, Peru, South Africa, Spain, United Kingdom,
United States.
12 East Germany, Hungary, Kenya, Puerto Rico, Tan-
ganyika.
"3Australia, Burma, Czechoslovakia, Iraq, Malaysia,
Mexico, Nicaragua, Nigeria, Paraguay, Poland, Sudan,
Sweden, Turkey, Uganda.
14 Bulgaria, Guatemala.
1"Pakistan from Pakistan, Statistical Yearbook, 1965-
1966, p. 281.
 BALANCED AND UNBALANCED GROWTH 379

TABLE 1. - ESTIMATED INCOME ELASTICITIES OF TABLE 2. - CORRELATION COEFFICIENTS BETWEEN

DEMAND FOR GLOBAL SECTORS AND FOR RATES OF GROWTH AND INDICES OF IMBALANCE'
MANUFACTURING SUBSECTORS a
Index 1948-1953 1954-1958 1950-1960

Sectors Es V - 0.423 -0.481* -0.382*

Global (n=19) (n=64) (n=55)

V* --0.426 -0.428* - 0.322*
Agriculture (0) 0.952
(n=19) (n=64) (n= 55)
(0.037)
-0.476* -0.423* - 0.308*
Mining (1) 0.892
(n =19) (n =64) (n=55)
(0.089)
-0.531* -0.528* -0.543*
Manufacturing (2-3) 1.044
(n=15) (n=25) (n =19)
(0.030)
0.545* -Q.459* -0.563*
Construction (4) 1.035
(n=15) (n=25) (n=19)
(0.026)
V oltk -0.481 - 0.495* -0.331
Electricity - Coal-Water (5) 1.045
(n= 15) (n -_ 25) (n-_ 19)
(0.050)
Others (6, 8-9) 0.999 Sources: appendix tables 1 and 2.
a Starred coefficients are significantly different from zero at levels
(0.020) 5 per cent on a one-tail test. All coefficients (except V"k for
1950-1960) are significantly different from zero at the : 10 per cent
Manufacturing Subsectors level.

Food, beverages, and tobacco (20-22) 0.821

(0.248) total income elasticities for the manufacturing
Textiles (23) 1.041 sector are similarly estimated. These estimates
(0.283)
of income elasticities are presented in table 1.17
Clothing and footwear (24) 1.046
(0.245)
Wood products (25-26) 1.091 III Rates of Growth and Indices of Imbalance
(0.247)
Paper and paper products (27) 1.062 Appendix table 1 reports the three alter-
(0.290)
in terms of subsectoral income elasticities of demand within
Printing and publishing (28) 1.367
the manufacturing sector. He employs the elasticity data
(0.236)
provided by United Nations, A Study of Industrial Growth
Leather and leather products (29) 1.011
[12, p. 7] which are estimated from the regression equation
(0.240)
Rubber products (30) 1.003 In Vi = a + b In y + c lnP
where V, is the subsectoral value added, y is per capita
(0.288)
income and P is population (for the pooling of the 1953 and
Chemicals and petroleum (31-32) 1.077
1958 cross sections of 53 and 42 countries, respectively).
(0.236)
However, Swamy [9, table 3] reports (and presumably
Non-metallic mineral products (33) 1.107
utilizes) the population instead of the income elasticities
(0.218)
from the above source. In any case, even the correct income
Basic metals (34) 1.157
elasticities when estimated from the above regression would
(0.164)
have been unsatisfactory for Swamy's purpose since they
Metal products (35-38) 1.088
fail to account for possible differential rates of population
(0.278)
growth across countries. For purposes of comparison we
Other manufacturing (39) 1.450
supply the per capita income elasticities of the manufac-
(0.267)
turing subsectors from [12, p. 7].
Sources: See appendix tables 1 and 2.
a Elasticities are estimated from the equation In Vi = a + b In y Manufacturing Subsectors Et
where Vi is value added per capita for the industrial sector or sub-
Food, beverages, and tobacco (20-22) 0.978
sector, and y is per capita GDP.
Textiles (23) 1.205
Clothing and footwear (24) 1.361
cross section for the periods 1948-1953, 1954- Wood products (25-26) 1.531
1958 and 1950-1960. Paper and paper products (27) 2.035
Income elasticities for sectoral demand are Printing and publishing (28) 1.718
Leather and leather products (29) 0.893
not immediately available. We proceed to esti- Rubber products (30) 1.582
mate them directly from a cross section of Chemicals and petroleum (31-32) 1.547
observations relating to the countries of our Non-metallic mineral products (33) 1.157
Basic metals (34) 1.991
sample for one year circa 1960. We employ the Metal products (35-38) 1.984
regression equation Other manufacturing (39) 1.847
'In estimating income elasticities we overlook exports
Invi a+ blny
and imports, i.e., we make the assumption that they roughly
where vi is the sectoral value added per capita level out for each sector in the sample. Ideally income elas-
and y is GDPi per capita.'6 The subsectoral ticities for individual countries should be used. Unfor-
tunately, such data are not available for a sufficiently large
6 Swamy defines his elasticity model of imbalance only
number of countries.

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380 THE REVIEW OF ECONOMICS AND STATISTICS
native indices of imbalance, computed for each
country in the international cross section and
for the periods 1948-1953, 1954-1958 and
1950-1960. The value of this index measures
the degree to which, in each case, there existed
a divergence from the postulated balance. A V
or V* index of zero implies that the growth
rate of each sector was equal to the overall
growth rate in GDP for a specific country in
a certain period."8 A V' index of zero indicates
a change in scale in the economy proportional
to the elasticity of demand for the output of
each sector. Finally, an index of V" of zero
has the same interpretation as the V' index but
it refers to the change of the manufacturing
subsectors within the manufacturing sector.
The existence of a relationship between the
alternative indices of imbalance and the rates
of growth in GDP is investigated by correla-
tion analysis. The results appear in table 2.
An inverse relationship exists between sec-
toral or subsectoral variability and the rate of
growth. This finding appears consistently and
uniformly for all periods and for all indices of
imbalance, for the global sectors as well as for
the manufacturing subsectors. All coefficients
are statistically significant at the 10 per cent
level and most are significant at the 5 per cent
level. Moreover, the V' index, which is the
most refined and deserves more emphasis, pro-
duces consistently significant and negative
coefficients at the 5 per cent level. The con-
clusion seems compelling that high sectoral
imbalance is associated with low overall rate
of growth. This contradicts the unbalanced
growth hypothesis. At the manufacturing sub-
sector level besides the negative sign of the
relationship we cannot differentiate further be-
"8To see that both v = O and V* = 0 have identical
implications, let p, be the sectoral rate and p' be the overall
rate. Then consider the case of "non-divergent-growth":
p, = p' for all i.
The "share" of the ith sector is initially, at time 0:
wM(a) = Y4(6)
Y(6)
and at time t it is
pit
Yi (t) Y (0) e Yj(O) (P,-p,)t y4 (0
wd(t)= = - - e e
Y(t) Y(0) ep't Y(0) Y(0)
It is readily seen that growth cannot be divergent and
maintain proportionality. The interpretation of V* = 0 is
therefore identical to that of 1- = 0. The difference arises in
the interpretation of V* #4 0 and 1V = 0. We owe this point
to Paul A. David.
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tween the effects of the imbalance in the "ver
tical sequence" (i.e., producers' goods) and the
"horizontal sequence" (i.e., consumers' goods)
In both cases the effects of imbalance appeai
to be detrimental.19
IV Level of Development and Indices
of Imbalance
We investigate next the relationship betweer
the level of development as indicated by GNEF
per capita and the indices of imbalance. The
reason for this classificatory exercise is that il
would be interesting to see if richer countries
are more or less unbalanced, in general, thar
poorer countries. If the finding is more im-
balance, this would constitute an interesting
"reversal" hypothesis, in view of the conclu-
sions of the previous section. The implication
would be that, although "imbalance is bad fox
a country," i.e., balanced growth is associated
with a higher rate of development, coun-
tries generally grow in an unbalanced way
after a certain level of development has been
achieved.20
Table 3 reports the Spearman rank correla-
tion coefficients between the three indices ol
imbalance and the level of development aE
measured by Kuznets' [6, appendix table 1]
tabulation of GNP per capita for 1958. The
results are again consistent for all the indices
of imbalance and for the three periods, 1948-
19 These findings are diametrically opposed to Swamy's
[9] who in general finds positive and high correlation coeffi-
cients between imbalance and rate of growth. We have
already commented on the likely causes of Swamy's find-
ings - the inappropriate indices used and the unrefined and
often incorrect data. One more comment is appropriate on
Swamy's classification of countries according to sectoral
balance or imbalance. Actually, two basic problems are
confused, i.e., (a) whether a country, given its structure,
displays the characteristics of balance or imbalance - a
question of the magnitude of the V index; and (b) whether
balance or imbalance is preferred in general, i.e., whether
low V's are associated with low or high G's. Swamy clas-
sifies countries not on the basis of their ranking according
to V but on the basis of the correlation of the individual
country's V's with its G's. This obviously addresses neither
question (a) nor question (b). A negative correlation be-
tween V and G is called balanced growth while it obviously
means that for a specific country G increases when V
decreases, i.e., balance is presumably good for it.
20 Swamy reported in favor of such "reversal" hypothesis.
In his case the finding of a direct relationship between
imbalance and rate of growth was reversed by the result
that countries, once past a certain level of development,
tend to grow in a balanced way.
 BALANCED AND UNBALANCED GROWTH 381

TABLE 3. -RANK CORRELATION COEFFICIENTS sion line. This is interpreted as evidence in

BETWEEN GNP PER CAPITA (1958) AND
favor of the unbalanced growth strategy.
INDICES OF IMBALANCE a
Our findings fail to support the unbalanced
Index 1948-1953 1954-1958 1950-1960 growth hypothesis. On the contrary, our in-
V -0.112 -0.520* -0.376* dices of imbalance, whether they referred to
(n= 19) (n=58) (n=50) the von Neumann notion of uniformity, to the
V* -0.146 -0.381* -0.251*
Nurkse variant of elasticity, or to the distinc-
(n =- 19) (n= 58) (n = 50)
lp' -0.403* -0.614* -0.680* tion between producer and consumer oriented
(n = 19) (n=- 58) (n= 50) industries, are inversely related to the rate of
Sources: Per capita GNP from S. Kuznets, "Quantitative Aspects growth. A similar inverse relationship exists
of the Economic Growth of Nations: IX Level and Structure of
Foreign Trade: Comparisons for Recent Years," Economic Develop- between the indices of imbalance and the level
ment and Cultural Ckange (Oct. 1964), 13, part II, appendix table 1.
Indices of Imbalance from appendix tables 1 and 2. of development. These negative correlations
a Starred coefficients are significantly different from zero at levels
5 per cent on a one-tail test. appear consistently for all subperiods of the
1948-1960 period and they are in general sta-
1953, 1954-1958, and 1950-1960. They strong- tistically significant. The statistical evidence
ly suggest that the more developed countries should be interpreted as confirming the bal-
have tended to grow in a more balanced fashion. anced growth hypothesis. However, this con-
clusion should be couched in the caveats that
are appropriate when one deals with interna-
V Summary and Conclusions
tional cross sections and with relatively short
The theoretical discussion on the merits of periods.
balanced or unbalanced growth as related to
the goal of rapid economic development has
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382 THE REVIEW OF ECONOMICS AND STATISTICS

[11] Suttcliffe, R. B., "Balanced and Unbalanced
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[12] United Nations, Department of Economic and
Social Affairs, A Study of Industrial Growth
(New York, 1963).
[13] United Nations, Department of Economic and
Social Affairs, Yearbook of National Accounts
Statistics (New York, 1967 and 1968).
[14] United Nations, Statistical Office, The Growth
of World Industry 1938-1961: National Tables
(New York, 1963).
[15] United Nations, Statistical Office, Statistical Year-
book (New York, 1967 and 1968).

APPENDIX TABLE 1. - OVERALL GROWTH RATES IN GDP AND SECTORAL IMBALANCES FOR 65 COUNTRIES

Indices of Imbalance

Country Overall Growth Rates, G V* V

1948-53 1954-58b 1950-60c 1948-53a 1954-58b 1950-60c 1948-53a 1954-58b 1950-60c 1948-53a 1954-58l' 1950-60c

Algeria 0.103 0.073 0.536 0.453 0.727 0.553 0.453 0.335

Argentina 0.031 0.016 0.459 1.814 0.350 0.598 0.337 0.773
Australia 0.030 0.042 1.516 0.826 0.830 0.591 0.612 0.333
Austria 0.071 0.056 0.359 0.458 0.2 74 0.306 0.306 0.294
Belgium 0.035 0.026 0.030 0.443 0.949 0.742 0.324 0.448 0.398 0.606 0.514 0.434
Brazil 0.022 1.257 0.869 1.049
Bulgaria 0.044 1.082 1.118 1.384
Burma 0.039 0.055 2.438 1.298 1.341 0.733 1.207 0.707
Canada 0.090 0.065 0.046 0.464 0.522 0.682 0.368 0.468 0.533 0.191 0.325 0.281
Chile 0.020 0.034 3.000 0.821 1.403 0.598 1.335 0.580
China, Republic of 0.078 0.079 1.174 0.507 0.454 0.160 0.610 0.601
Colombia 0.033 0.045 0.924 0.608 0.472 0.292 0.872 0.488
Cyprus 0.041 0.032 2.872 3.189 1.383 1.274 1.177 1.231
Czechoslovakia 0.130 0.086 0.882 1.015 0.548 0.596 0.401 0.404
Denmark 0.040 0.025 0.033 2.973 1.597 0.765 0.667 0.300 0.318 0.942 0.528 0.304
Ecuador 0.035 0.049 0.896 0.840 0.532 0.260 0.439 0.565
Finland 0.045 0.029 0.047 0.459 0.513 0.324 0.364 0.496 0.338 0.381 0.297 0.409
France 0.046 0.043 0.601 0.470 0.438 0.229 0.277 0.301
Germany, East 0.095 0.154 0.356 0.264 0.299 0.238 0.526 0.401
Germany, West 0.067 0.078 0.439 0.381 0.300 0.315 0.265 0.341
Greece 0.082 0.061 0.057 1.162 0.890 0.858 0.460 0.373 0.328 0.917 0.513 0.547
Guatemala 0.046 0.038 1.001 0.580 0.427 0.265 0.476 0.462
Honduras 0.037 0.053 0.033 2.447 1.577 1.943 1.168 0.536 0.562 1.042 0.799 1.043
Hungary 0.062 0.065 1.450 0.759 0.870 0.566 1.165 0.724
India 0.030 0.032 0.037 0.157 0.284 0.169 0.122 0.288 0.185 0.770 0.588 0.583
Iraq 0.062 0.068 1.182 0.974 0.605 0.683 0.469 0.466
Ireland -0.008 -0.012 0.035 2.484 1.261 0.518 2.290 1.242 0.486 2.467 1.648 0.353
Israel 0.119 0.121 0.099 0.061 0.082 0.037 0.435 0.345
Italy 0.072 0.054 0.061 0.998 0.845 0.848 0.552 0.352 0.526 0.755 0.525 0.525
Jamaica 0.090 0.090 0.937 2.192 0.674 1.157 0.590 1.143
Japan 0.127 0.082 0.087 0.461 0.374 0.448 0.434 0.319 0.363 0.339 0.302 0.294
Kenya 0.035 1.434 0.804 0.585
Korea, Republic of 0.031 0.050 0.058 3.865 1.711 2.711 1.794 0.930 0.971 1.578 1.024 0.958
Luxembourg 0.040 0.658 0.451 0.418
Malaya 0.020 2.666 1.402 1.532
Mexico 0.078 0.071 0.281 0.286 0.113 0.166 0.474 0.401
Morocco -0.006 0.004 11.799 14.549 7.352 9.394 7.310 9.392
Netherlands 0.041 0.052 0.052 0.944 0.453 0.442 0.384 0.338 0.317 0.384 0.340 0.185
Nicaragua 0.049 0.039 1.207 2.079 0.444 0.713 0.566 0.720
Nigeria 0.021 0.028 3.280 1.902 1.705 0.915 2.093 1.239
Norway 0.023 0.035 1.436 0.630 0.851 0.467 0.715 0.292
Pakistan 0.032 0.020 0.027 2.305 3.524 2.474 0.685 1.093 0.849 0.854 0.953 0.865
Paraguay 0.043 0.033 1.121 1.478 0.283 0.395 0.549 0.584
Peru 0.036 0.056 1.212 0.538 1.357 0.606 1.018 0.353
Philippines 0.070 0.056 0.057 1.191 0.771 0.472 0.537 0.933 0.355 0.956 0.611 0.568
Poland 0.082 0.075 0.688 0.448 0.568 0.384 0.534 0.419
Portugal 0.036 0.036 0.044 0.985 1.392 1.083 0.518 0.895 0.561 0.888 0.674 0.443
Puerto Rico 0.070 0.072 0.054 0.520 0.704 0.636 0.538 0.526 0.556 0.373 0.301 0.247
Rhodesia 0.027 3.606 2.879 2.832
South Africa 0.059 0.024 0.038 0.353 1.444 0.803 0.338 1.021 0.585 0.671 0.757 0.377
Spain 0.052 0.526 0.256 0.558
Sudan 0.040 1.762 0.522 0.709

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 BALANCED AND UNBALANCED GROWTH 383

Sweden 0.033 0.037 0.575 0.467 0.331 0.300 0.205 0.196

Syria -0.009 5.746 5.554 6.031
Tanganyika 0.016 2.419 1.665 1.512
Thailand 0.034 0.056 1.721 0.958 0.483 0.332 1.018 0.568
Tunis 0.034 0.037 1.302 3.941 1.000 4.589 1.466 4.602
Turkey 0.044 0.041 0.926 0.934 0.428 0.542 0.541 0.532
Uganda 0.035 3.112 0.884 1.123
United Arab Republic 0.057 0.049 1.557 1.265 0.432 0.483 0.598 0.493
United Kingdom 0.020 0.024 0.029 0.886 0.780 0.719 0.472 0.458 0.384 0.285 0.302 0.230
United States 0.040 0.031 0.036 1.401 0.576 0.952 0.836 0.459 0.485 0.618 0.343 0.294
Uruguay 0.013 0.010 2.575 2.542 1.062 1.256 0.963 0.995
Venezuela 0.080 0.076 0.667 0.598 0.246 0.185 0.314 0.295
Yugoslavia 0.088 0.087 0.477 0.465 0.499 0.509 0.427 0.418

Sources: 1. United Nations, Statistical Office, The Growth of World Industry, 1953-1965: National Tables, New York, 1967: For the fol-
lowing countries: Algeria, Argentina, Austria, Belgium, Brazil, Chile, Colombia, Cyprus, Denmark, Ecuador, Finland, France, Germany, Greece,
Honduras, India, Italy, Jamaica, Korea, Luxembourg, Morocco, Norway, Philippines, Portugal, Rhodesia, Syria, Thailand, Tunis, United Arab
Republic, Uruguay, Venezuela, Yugoslavia.
2. Group A: United Nations, Statistical Office, The Growth of Wor-ld Industry, 1953-1965: National Tables, New York, 1967; and
International Monetary Fund, International Financial Statistics, Supplement to 1966/67 issue: For the following countries: Canada, China,
Ireland, Israel, Japan, Netherlands, Peru, South Africa, Spain, United Kingdom, United States of America.
3. Group B: United Nations, Statistical Office, The Growth of World Industry, 1953-1965: National Tables, New York, 1967; and
deflators from national sources: For the following countries: East Germany, Hungary, Kenya, Puerto Rico, Tanganyika.
4. Group C: United Nations, Department of Economic and Social Affairs, Yearbook of National Accounts Statistics, New York, 1967 and
1968: For the following countries: Australia, Burma, Czechoslovakia, Iraq, Malaysia, Mexico, Nicaragua, Nigeria, Paraguay, Poland, Sudan,
Sweden, Turkey, Uganda.
5. Group D: United Nations, Statistical Office, Statistical Yearbook, New York, 1967 and 1968: For the following countries: Bulgaria,
Guatemala.
Pakistan, Statistical Yearbook, 1965 and 1966: For the following countries: Pakistan.
a All entries are for years 1948-1953 except for:
Years 1949-1953: Canada, Pakistan.
b All entries are for years 1954-1958 except for:
Years 1953-1958: Austria, Bulgaria, Burma, Czechoslovakia, Guatemala, Iraq, Mexico, Nicaragua, Nigeria, Poland, Paraguay, Sweden,
Turkey, Uruguay.
Years 1955-1958: Malaysia, Sudan, Uganda.
e All entries are for years 1950-1960 except for:
Years 1953-1960: Australia, Burma, Czechoslovakia, Iraq, Ireland, Israel, Mexico, Morocco, Nicaragua, Nigeria, Paraguay, Poland, South
Africa, Sweden, Turkey, Uruguay, Yugoslavia.
Years 1951-1960: China-Taiwan, Thailand, United Kingdom.

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384 THE REVIEW OF ECONOMICS AND STATISTICS

APPENDIX TABLE 2. - GROWTH RATES IN MANUFACTURING PRODUC

AND SUBSECTORAL IMBALANCES FOR 30 COUNTRIES

Indices of Imbalance

Country Overall Growth Rates, Gm V' Vc V"k

1948-53'1 1954-581' 1950-60c 1948-53a 1954-58b 1950-60c 1948-53 a 1954-581' 1950-60c 1948-53a 1954-58bl95060c

Argentina -0.017 1.925 1.585 1.092

Australia 0.078 0.390 0.284 0.266
Brazil 0.097 0.563 0.343 0.447
Canada 0.055 0.035 0.035 0.441 0.577 0.531 0.253 0.304 0.330 0.361 0.490 0.416
China, Republic of 0.086 0.147 0.600 0.332 0.522 0.219 0.295 0.250
Colombia 0.044 0.076 2.218 0.465 0.402 0.149 2.181 0.441
Denmark 0.039 0.035 0.044 0.456 0.795 0.627 0.288 0.545 0.447 0.354 0.579 0.440
Finland 0.050 0.024 0.064 0.597 1.305 0.329 0.471 0.857 0.256 0.367 0.985 0.206
Germany, West 0.220 0.165 0.127 0.106
Guatemala 0.082 0.823 0.658 0.494
India 0.061 0.068 0.875 0.605 0.442 0.318 0.755 0.514
Ireland 0.067 0.007 0.030 0.433 3.111 0.672 0.364 2.474 0.593 0.233 1.886 0.317
Italy 0.102 0.068 0.091 0.406 0.451 0.409 0.324 0.392 0.347 0.244 0.223 0.215
Japan 0.259 0.122 0.183 0.309 0.513 0.335 0.230 0.298 0.218 0.206 0.418 0.255
Luxembourg 0.008 0.041 0.045 2.160 0.694 0.617 1.153 0.626 0.447 1.826 0.300 0.426
Mexico 0.037 1.082 0.824 0.702
Netherlands 0.075 0.035 0.062 0.359 0.465 0.365 0.268 0.340 0.253 0.238 0.317 0.262
New Zealand 0.024 0.055 0.937 0.493 0.463 0.330 0.815 0.366
Norway 0.061 0.041 0.053 0.538 0.815 0.390 0.340 0.463 0.317 0.417 0.671 0.227
Peru 0.051 0.066 1.002 0.339 0.487 0.204 0.876 0.270
Philippines 0.109 0.479 0.443 0.181
Portugal 0.071 0.333 0.190 0.273
Rhodesia 0.105 0.456 0.301 0.342
Romania 0.133 0.272 0.192 0.192
South Africa 0.078 0.057 0.348 0.460 0.306 0.348 0.166 0.301
Sweden 0.035 0.495 0.408 0.280
United Arab Republic 0.078 0.042 0.283 0.896 0.217 0.408 0.181 0.797
United Kingdom 0.041 0.016 0.034 0.324 1.261 0.487 0.257 1.032 0.433 0.198 0.724 0.224
United States 0.060 0.021 0.036 0.652 1.043 0.521 0.434 0.266 0.263 0.488 1.008 0.450
Yugoslavia 0.141 0.279 0.169 0.222
Sotirces: United Nations, Statistical Office, The
a Growth rates for manufacturing (Gm) and fo
1948-1953.
Shares of manufacturing subsectors (WiM) are computed by using the average value added for the years 1948 and 1953, excep
Germany (1950 and 1954), Mexico (1950 and 1955), South Africa (1952 and 1953), United Kingdom (1948 and 1954), and U
States (1947 and 1954).
b As in footnote a, GM and gum are for the years 1954-1958.
Also as in footnote a, Wim from the average value added for the years 1954 and 1958, except for: Brazil (1953 and 1958), Canada
(1953 and 1958), Republic of China (1954 and 1959), Colombia (1953 and 1958), Denmark (1953 and 1958), Guatemala (1953 and
1958), India (1953 and 1957), Ireland (1953 and 1958), Italy (1953 and 1958), Japan (1953 and 1958), Luxembourg (1953 and
1958), Netherlands (1953 and 1958), New Zealand (1953 and 1958), Norway (1953 and 1958), Philippines (1956 and 1958), Sweden
(1953 and 1958).
c As in footnote a, Gm and gum are for the years 1950-1960, except for: UIAR (1951-60).
Also as in note a, Wum from the average value added in the years 1948 and 1958, except for: Columbia (1945 and
(1947 and 1958), Romania (1950 and 1059), South Africa (1957 and 1958), US (1947 and 1958).

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