'Immiserizing growth' is the term given by
Understanding Immiserizing Growth
The question asks to identify the economist credited with coining the term 'Immiserizing growth'. This is a specific concept within international economics, particularly related to the effects of trade and economic growth on national welfare.
Defining Immiserizing Growth
'Immiserizing growth' refers to a theoretical situation where a country experiences economic growth, but its welfare actually declines. This paradox can occur under specific conditions, primarily in open economies engaged in international trade.
Here's a breakdown of the core idea:
- Growth Occurs: The country's production capacity increases, perhaps due to technological advancements or increased resource availability.
- Terms of Trade Deteriorate: This growth significantly worsens the country's terms of trade (the ratio of its export prices to its import prices). For example, if growth is strongly biased towards export goods, increased supply on the world market might drive down the price of those exports.
- Welfare Declines: The negative impact of the deteriorating terms of trade outweighs the positive effect of the growth in output. The country has to export significantly more to import the same amount, leading to a net loss in real income and consumption possibilities, hence reducing welfare.
The Economist Behind the Term
The concept of 'Immiserizing growth' was introduced and formalized by the renowned economist Jagdish Bhagwati.
Bhagwati presented this idea in the context of international trade theory, showing how under certain restrictive conditions (like extreme export-biased growth, a very low price elasticity of demand for exports, and a high propensity to trade), growth could be detrimental to a nation's welfare.
Analyzing the Options
Let's briefly look at the provided options:
- Amartya Sen: Known for his work on welfare economics, development economics, and social choice theory, particularly on poverty, famine, and capabilities. While his work relates to welfare, he is not associated with the term 'Immiserizing growth'.
- N. Kaldor: Nicholas Kaldor made significant contributions to macroeconomics, growth theory, and welfare economics (e.g., Kaldor-Hicks efficiency). However, he is not the economist who coined 'Immiserizing growth'.
- Paul Krugman: A prominent economist known for his work on international trade, economic geography, and macroeconomics. While he has written extensively on trade, the term 'Immiserizing growth' predates much of his core work in this area and is attributed to someone else.
- Jagdish Bhagwati: As discussed, Jagdish Bhagwati is indeed the economist credited with introducing the concept and the term 'Immiserizing growth' into economic literature.
Therefore, based on the historical development of economic theory, Jagdish Bhagwati is the correct answer.
| Economist | Associated Concepts (Examples) | Coined 'Immiserizing Growth'? |
|---|---|---|
| Amartya Sen | Capabilities Approach, Social Choice, Poverty, Famine | No |
| N. Kaldor | Kaldor-Hicks Efficiency, Growth Models | No |
| Paul Krugman | New Trade Theory, Economic Geography, Macroeconomics | No |
| Jagdish Bhagwati | Immiserizing Growth, Theory of Commercial Policy, Anti-Globalization Argument | Yes |
Conclusion on Immiserizing Growth
The term 'Immiserizing growth' highlights a potential, albeit rare in practice, pitfall of economic growth in an open economy. It serves as a reminder that the welfare implications of growth are complex and depend on factors like the pattern of growth and its impact on international prices (terms of trade).
The economist who gave the term 'Immiserizing growth' is Jagdish Bhagwati.
Revision Table: Immiserizing Growth
| Concept | Definition | Key Figure |
|---|---|---|
| Immiserizing Growth | Economic growth that leads to a decline in national welfare, primarily due to a severe deterioration in the terms of trade. | Jagdish Bhagwati |
Additional Information: International Trade and Welfare
Understanding 'Immiserizing growth' requires knowledge of related concepts in international trade theory:
- Terms of Trade (TOT): Calculated as (Index of Export Prices / Index of Import Prices) * 100. An improvement in TOT means export prices rise relative to import prices, allowing the country to import more goods for the same amount of exports, increasing welfare. A deterioration is the opposite.
- Biased Growth: Economic growth can be biased towards producing certain goods. If growth is strongly biased towards the country's export sector, it can significantly increase the supply of exports on the world market.
- Elasticity of Demand: The responsiveness of quantity demanded to a change in price. If the world demand for a country's exports is price inelastic, a large increase in export supply (due to growth) can cause a sharp fall in export prices, severely worsening the terms of trade.
Immiserizing growth is a theoretical possibility that underscores the importance of considering global market conditions and the structure of growth when evaluating its impact on national welfare.
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