Leontief multipliers are an important component of economic growth. However, input–output analysis is generally treated as a methodological tool for studying other questions in development. The size of multipliers themselves is of interest, as they determine how much nations benefit economically from the growth of base industries. Of the three types of multipliers—industrial supply purchases by firms, consumer goods purchases by workers, and growth derived from all sources—only the first has attracted attention in the global value chain literature; the other two have been neglected. We use OECD data on a large sample of nations in 2005, 2010, and 2015 to show that significant cross-national and inter-industrial differences exist in the size of multipliers. Contrary to expectations, higher-income countries can sometimes have lower multipliers than lower-income countries. The largest multipliers tend to be in the global South. We then provide a model explaining the differences in multipliers in terms of the domesticity of purchases, the wage intensity of production, the geographical size of the country, and the changing roles of GDP per capita and education as societies develop. The significance of these findings for development policy is discussed.
Why Economic Growth Stimulates More Growth in Some Countries Rather than Others
Samuel Cohn is a retired Full Professor of Sociology at Texas A&M University. He is the founder and first president of the American Sociological Association Section on Development. He studies the state and development, gender and development, and coercive development.
Jose Morales is a Graduate Student in the Institute of Development Studies at the University of Sussex. His research interests are economic growth, industrial policy, international tax evasion, and equitable transitions.
Madison Poe is a Management and Program Analyst at the U.S. Agency for International Development and a Center Coordinator at the Fred C. Cuny Peace and Conflict Center. She studies the determinants of economic multiplier size, conflict transformation in the Balkans, and foreign aid allocation decision-making. Madison received her MSc in Global Governance and Diplomacy from the University of Oxford.
Yilin Li is an undergraduate student of economics at Texas A&M University. Her research interests are gender-based violence and discrimination, healthcare inequities, development, and labor.
Bryson Bassett is a PhD student in the Department of Sociology at Texas A&M University. An environmental sociologist, Bryson Studies organizational political embeddedness of the oil industry and how this industry influences policy in environmental enforcement agencies.
Samuel Cohn, Jose Morales, Madison Poe, Yilin Li, Bryson Bassett; Why Economic Growth Stimulates More Growth in Some Countries Rather than Others. Sociology of Development 2023; doi: https://doi.org/10.1525/sod.2022.0017
Download citation file: