New Avenues in Development Economics: Identifying the Determinants of Economic Shrinking

Sammanfattning

Recently there has been a revision of longstanding ideas in development economics. Studies have shown that it is not so much increases in growth rates which cause long-term economic development, but rather decreases in shrinking rates, alongside a reduced frequency of shrinking. This paper reviews two theories of economic shrinking, one based on 5 social capabilities and the other based on 4 dimensions which are theorized to affect economic shrinking. Of these proposed categories only ‘state autonomy’, ‘demographic change’ and possibly ‘the inclusion of the population in the market’ are significantly related to economic shrinking. Future research should not only improve the theoretical foundation and operationalization of variables which determine shrinking, but also leverage data-driven methods to identify the dimensions underlying economic shrinking.