What are the advantages and disadvantages of Kaldor's Theory?

Answer 1

Kaldor's Theory, particularly his growth theory, emphasizes the role of increasing returns to scale and the importance of technological progress in driving economic growth. An advantage of this theory is its focus on the dynamic relationships between production, investment, and technological advancement, providing a more realistic view of economic growth compared to classical models. However, a disadvantage is that it can be overly simplistic in its assumptions about constant returns and may not adequately account for external factors or the complexities of market dynamics. Additionally, Kaldor's emphasis on manufacturing may overlook the significance of services and other sectors in modern economies.