Immiserizing growth
theoretical concept of economic growth that, paradoxically, worstens the economy
Immiserizing growth is a theoretical situation first proposed by Jagdish Bhagwati, in 1958, where economic growth could result in a country being worse off than before the growth. If growth is heavily export based, it might lead to a fall in the terms of trade of the exporting country. In rare circumstances, this fall in the terms of trade may be so large as to outweigh the gains from growth. If so, this situation would cause a country to be worse off after growth than before. This result is only valid if the growing country is able to influence world prices. Harry G. Johnson had, independently, worked out conditions for this result in 1955.
Definition
The term "Immiserizing growth" is composed of the concepts of "Immiserizing" and "growth." In this context, Immiserizing can be understood as a social welfare loss. such as a decline in real income or job losses. The term "growth" here refers to export specialization and export expansion in the affected countries. For these countries, this means that they primarily focus on one product for exports and produce it in large quantities.
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