Introduction

The advent of new growth theory together with continuing improvements in historical statistics have combined to allow the authors of the case studies in this volume to develop a clearer and sharper picture of the process of economic growth in postwar Europe. In this final chapter, we wish to summarize the main messages which come from these studies. In doing so we wish not only to underline key insights for economic history students, but also to highlight some relevant findings for future work in growth economics.

Research in growth economics since the mid-1980s had centred on models which feature endogenous productivity growth. Sustained growth of real GDP/person is seen as coming from investments in human and physical capital and/or profitmotivated production and use of knowledge. Technological change is no longer consigned to an exogenous Solow residual, even though for many purposes it is still useful to measure total factor productivity (TFP) growth. In turn, it follows that the potential impact of institutional arrangements and policy on growth outcomes must now be taken seriously, rather than being confined to transitional dynamics, as in the traditional neoclassical growth model.

A much discussed aspect of growth is the catch-up of leading countries by followers, a familiar theme in European economic history at least since Gerschenkron (1962). It has become increasingly clear that catch-up growth is neither automatic nor universally achieved, but requires what Abramovitz (1986) called ‘social capability’, also making this type of productivity growth endogenous.