Growth Industries

3 Key excerpts on "Growth Industries"

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  eBook - ePub

  Measuring Economic Growth and Productivity

  Foundations, KLEMS Production Models, and Extensions

  • Barbara Fraumeni, Barbara M. Fraumeni(Authors)
  • 2019(Publication Date)
  • Academic Press

    (Publisher)

  Our view of economic growth operates at the industry level. We introduce a demand side, based on people's spending behavior. Growth is driven by demand for innovative products, whether consumer products or investment products, and the industries which cater to these demands. In addition, these Growth Industries create growing demand for their supplying industries through the input–output mechanism. However, the rapid Growth Industries account for only around 10% of the economy. The bulk of the economy, the established industries, grows at a moderate rate; demand for their products is driven by population and average incomes. In time, the Growth Industries will saturate their markets and their growth will slow. Continuing economic growth then depends on the emergence of new mass market products which create new Growth Industries.

  Production capacity increases by using more and better labor, more and better capital, and by improvements in TFP. Production in each industry is the lesser of demand and capacity. In this way, production responds to growing demand; economic growth is demand-driven and supply-enabled.

  Innovation is vital for economic growth. We separate innovation into two types—product innovation and process innovation. Product innovation underlies the creation of new products which lead to the new mass markets which are the drivers of growth. Process innovation operates on the supply side by increasing productivity; process innovation contributes to the expansion of supply to accommodate increasing demand.

  1.11.2. Hudson–Jorgenson

  Our approach could be expressed formally in a model of the type pioneered by Hudson and Jorgenson (1974) . The Hudson–Jorgenson framework had multiple industries, a Leontief type of input–output structure but with endogenous price formation and endogenous input–output coefficients including for factor inputs, and an endogenous consumption component of final demand. The characteristics of consumption expenditure and capital formation developed above could be incorporated into this earlier framework.

  1.11.3. Schumpeter

  Schumpeter (1942)

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  eBook - ePub

  Economic Growth

  How it works and how it transformed the world

  • Edward A. Hudson(Author)
  • 2016(Publication Date)
  • Vernon Press

    (Publisher)

  rate plus or minus one standard deviation. But some industries grew much more rapidly. Six of the 27 industries grew more rapidly than one standard deviation above the GDP growth rate, or more than 5.3% a year, over the 67 years covered in the Table.

  The vastly different behavior of different industries reinforces our view that understanding economic growth requires us to approach growth at the industry level where all these spending and production changes are taking place.

  S omething causes a few industries to show sustained, rapid growth while more industries grow more or less at the average rate. Understanding economic growth requires us to understand why different industries grow at different rates and, in particular, why some industries grow rapidly over long periods of time.

  8.3 

  Different types of industry growth

  All main industries were shown in Table 8.1 although the goods producing industries are more specific or detailed than the service industries. We can separate the 27 industries into three categories.

  (1) 

  Leading or growth. Six industries grew rapidly, at more than one standard deviation above the average rate. Three of these had large sales into final demand (final demand comprises finished goods and services for consumers, investment, governments or export).

  These were transportation equipment, electrical machinery, and communications

  and utilities. Final demand industries purchase inputs from other industries, the intermediate goods industries. Those intermediate industries supplying the rapidly growing final industries themselves experienced rapid growth. For example, transportation equipment pulled petroleum

  products and rubber products along rapid growth paths. Chemicals also grew rapidly in part by supplying the Growth Industries. The rapid Growth Industries are those industries associated either directly or indirectly with new growth products supplying final demand.

  (2)  Mainstream. Established industries tend to grow in line with the overall economy. These are industries such as food

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  eBook - ePub

  Growth Champions

  The Battle for Sustained Innovation Leadership

  • Tim Jones, Dave McCormick, Caroline Dewing, Tim Jones, Dave McCormick, Caroline Dewing(Authors)
  • 2012(Publication Date)
  • Wiley

    (Publisher)

  Part I The Growth Agenda: The Changing Dynamics of Innovation

  Growth is a shared ambition for many companies and governments. For the vast majority creating more wealth by improving productivity and delivering innovation is a priority. It is a prerequisite for maintaining living standards in the developed world and building wider wealth creation and distribution in emerging economies.

  Improving lives by building wealth is not a new idea. The industrial revolution in the 19th century heralded accelerated economic activity and production but as the post-colonial legacy steers nations from growth through regional aggrandizement, economic growth through the development of business has become a central focus for many. Economic growth comes with its own set of challenges, however. The cost to our environment is perhaps the most well recognized but as society becomes more global and we spend less time interacting with our local community, concerns around social issues are also beginning to emerge. Recently a sizable minority thinks that, in our resource-constrained world, we ought to look at the implications of unimpeded, consumption-driven growth and consider an alternative approach which will provide wealth without compromising on social and environmental well-being.

  However it manifests itself, a growth engine that drives the economy, provides more choice for consumers, increases wealth, and so affords better health and hopefully improved happiness has been a virtuous circle that many have aspired to. Pivotal to this has been the success of some major organizations that are the economic heart of a country. The East India Trading Company and other state-granted monopolies paved the way in the 19th century and were the forerunners of General Electric, IBM, and Wal-Mart in the 20th. More recently, the likes of Google and Infosys have created scale and delivered more products and services, have employed more people, and so, through salaries, taxation, and occasional bouts of philanthropic activity, have been able to benefit society as a whole.

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