Kaldor's growth theory

Kaldor's growth theory suggests that economic growth depends on the interactions between the manufacturing (industrial) and service sectors. It proposes that as the industrial sector expands, it drives income and demand, which then stimulates growth in the services sector. The theory emphasizes the importance of investment in industry and its productivity as key drivers; increased industrial productivity leads to higher income, boosting consumption and further growth. This cyclical process explains how a balanced and dynamic economy can sustain long-term growth through continuous development of both sectors, highlighting their interconnected roles in economic expansion.