THE ASSESSMENT: BRITISH ECONOMIC CGOWTH OVER THE LONG RUN^*

Criticisms and Defences of the Balance of Payments Constrained Growth Model: Some Old, Some New

“…It has been shown that the model is not just an identity. The early criticisms of McCombie (1981), McGregor and Swales (1985;), Crafts (1988 and (implicitly) Krugman (1989) do not stand up to scrutiny. The argument of Palley (2002) that the balance-ofpayments constrained growth model is inconsistent has been shown itself to be inconsistent.…”

“…As we noted above in discussing Crafts (1988;, for the advanced countries, disparities in  are not caused by variations in the composition of exports, but rather to some countries performing better in all export markets than others. (For a discussion of the UK, see Connell, 1979).…”

“…The second point confuses "constant-market-shares" income elasticities of demand with the income elasticities of demand as conventionally estimated. As both Balassa (1979) and Crafts (1988; make a similar mistake, I turn next to their critiques.…”

“…Finally, McGregor and Swales argue that the law fails to account for non-price competition and cannot explain changes in export market shares. The last criticism overlaps to some extent with Balassa's (1979) and Crafts' (1988; argument that Balassa's construction of hypothetical "constant-market-shares" export income elasticities of demand shows that, for example, the UK's growth could not have been balance-ofpayments constrained. Krugman's (1989) alternative supply-side explanation of the law (what he terms the 45-degree rule) is then considered.…”

Reward Management: A Retrospective Assessment

“…The argument within the Conservative government's agenda for change lifted reward management, albeit through rhetoric to a higher plain which has in theory at least been aimed at Mrs Thatcher's objective of changing Britain "from a dependent to a self-reliant society" [10]. An oft-repeated claim of government in the 1980s was that an economic miracle had been achieved and that somehow Britain's economy had been turned round compared to its state in the 1970s; a claim supported by some academics [11,12]. Deemed to be at the heart of this improvement was an economic and legislative assault on the trade unions aimed at significantly diluting the power and influence they had exercised in the 1970s: growing unemployment and a climate of insecurity influenced more passive and compliant behaviour among workers in contrast to the situation of earlier decades [12].…”