Simon Kuznets
Citation: For his empirically founded interpretation of economic growth which has led to new and deepened insight into the economic and social structure and process of development.
The key idea
Growth is structural transformation, not a single line on a chart. Inequality follows an inverted U as economies industrialise — the Kuznets curve.
The explanation
Kuznets built the modern national-accounts framework (GDP) at the NBER in the 1930s and used it to measure long-run growth across countries. He documented that industrial growth shifts workers from low-productivity agriculture to high-productivity industry — and that inequality first rises, then falls, as this transition proceeds.
Why Africa should care
African economies are mid-Kuznets-curve: 50-70% of employment is still in agriculture and informal services. The transition pattern Kuznets identified is exactly what 'structural transformation' policy in Ethiopia, Rwanda, and Kenya's BETA Plan tries to engineer. The inequality story is more complicated — McMillan-Rodrik (2014) shows African transitions have sometimes raised inequality without raising productivity.
How to use it
When reading an African growth statistic, ask: is the growth coming from intra-sector productivity, or from labour reallocation between sectors? Kuznets' framework lets you decompose the two and identify which engine is actually running.
Watch out for
The Kuznets inequality curve is contested; Piketty (2014) argues capitalism's natural drift is rising inequality. The post-1980 US data fits Piketty better than Kuznets.
Canonical works
- Simon Kuznets (1955) "Economic Growth and Income Inequality" American Economic Review
- Simon Kuznets (1934) "National Income, 1929-1932" NBER
- Margaret McMillan, Dani Rodrik, et al. (2014) "Globalization and Africa's Unfinished Agenda"
More from Foundations · 1969-1979
- 1969Ragnar Frisch and Jan Tinbergen
Economics is a measurable science. Build dynamic equations of the economy, estimate them with data, use them to forecast and design policy.
- 1970Paul Samuelson
Economic theory has the structure of physics: optimisation under constraints, with comparative statics and dynamic stability following from the same maximisation principles.
- 1972Kenneth Arrow and John Hicks
When can the totality of competitive markets simultaneously clear, and when is that outcome socially efficient? Arrow-Debreu (1954) proved existence; the First Welfare Theorem proved efficiency — under restrictive assumptions.
- 1973Wassily Leontief
An economy is a matrix. Each sector produces output by buying inputs from other sectors. Once you know the matrix of inter-industry flows, you can compute the total impact of any final-demand change.
- 1974Gunnar Myrdal and Friedrich Hayek
Two utterly opposite visions: Myrdal — economies are bound up with social institutions and demand activist policy; Hayek — markets coordinate dispersed knowledge in ways no planner can replicate.