| Transformational Growth is an approach to economic growth that is founded in Classical economic theory. It concentrates on the forces that enable economies to sustain and reproduce themselves. These forces are found in the technological and institutional nature of economies in different historical times. Therefore, as technology and institutions change, the forces underlying the economy change. No one theoretical model can explain the nature of these forces in different historical times.;In considering the Canadian economy in the periods pre-WWI (1889-1914) and post-WWII (1945-1975) differences in the explanatory principles of these eras predicted by Transformational Growth are tested. The empirical results, with few exceptions, support the theory of Transformational Growth.;The theoretical foundations of Transformational Growth are diverse. Although it is constituted very differently than Neoclassical theory, Neoclassical theory has a role in the theory Transformational Growth--particularly in explaining the economies of the late nineteenth century. Other theoretical structures offer various ways in which the changing forces precipitating growth can be analyzed. Kaldor, Kalecki, Steindl, Rostow and Arthur provide insights into how the forces for economic growth can come together to move an economy from one relatively stable stage, described by one set of explanatory principles, to another relatively stable stage where different explanatory principles hold. North provides a broadly based institutional analysis that it is narrowly applied in Neoclassical theory. It may be more appropriately applied in Transformational Growth.;The importance of technological and institutional change is considered in the wheat sector of the Canadian economy in the pre-WWI period, and the automobile sector in the post-WWII period. In both cases, the complementarity of the technologies and institutions led to economic growth. The effects of these cumulative forces had effects far beyond the sectors themselves.;Applying Transformational Growth to the Canadian economic development, to some degree, revives the tradition of Canadian political economy founded by Mackintosh and Innis early in this century. Like Canadian political economy, Transformational Growth provides a broad theoretical model that fits the changing nature of the Canadian economy. Its theory helps explain two very different periods of Canadian economic development. |
