Moses Abramovitz

Moses Abramovitz
Born	(1912-01-01)January 1, 1912 Brooklyn, New York
Died	December 1, 2000(2000-12-01) (aged 88) Stanford, California
Nationality	American
Alma mater	Harvard University and Columbia University
Known for	Economic history
Scientific career
Fields	Economics and Education
Institutions	Stanford University

Moses Abramovitz (January 1, 1912 – December 1, 2000) was a 20th-century American economist and professor. Born and raised in Brooklyn, New York, he completed his bachelor's degree summa cum laude in Economics at Harvard University. He went to Harvard with the intention of becoming a lawyer; in light of this, he took criminal justice classes as well as economics. He became more interested in economics than criminal justice because was able to connect economics to the world in which he was living. He earned his Ph.D. at Columbia University in 1939. In 1985, he was awarded an honorary doctorate from the University of Uppsala in Sweden. In 1991, he was invited to Rome to become a fellow of the prestigious Accademia Nazionale dei Lincei. He was awarded another doctorate at the University of Ancona, in 1992. Abramovitz died in California at Stanford Hospital on December 1, 2000, at the age of 88. He was suffering from a gastroenterological infection.

Abramovitz was known for his modest personality and was one of the least ego-driven scholars in economics. Known as Moe among family and friends, he married Carrie Glasser, a Brooklyn-born painter and sculptor, in 1937. She died in 1999.

Abramovitz started his career as a lecturer at Harvard University in the mid-1930s. After finishing his doctorate at Columbia University, he joined the National Bureau of Economic Research in New York, where he began his investigation of inventory investment cycles. During World War II, Abramovitz served on the War Production Board and in the Office of Strategic Services as chief of the European industry and trade section. In 1945 and 1946, he was economic adviser to the United States representative on the Allied Reparations Commission. He also was one of the founding faculty of the Department of Economics at Stanford University, which he joined in the fall of 1948 and taught in for almost 30 years. From 1962 to 1963 he served as adviser to the secretary general of the Organization of Economics Cooperation and Development in Paris. He then became the chair of the organization from 1963 to 1965 and from 1971 to 1974. Over the course of his career Abramovitz made many pioneering studies of macroeconomics and long-term growth. His 1986 article "Catching up, Forging Ahead and Falling Behind" is the second most cited of all the papers published by the Journal of Economic History.

Theories

Catch-up Growth

Moses Abramovitz's theory, known as the Catch-Up Growth Hypothesis, attempted to explain what caused Western Europe's Golden Era of economic growth from 1948 until 1972. The Catch-Up Growth Hypothesis essentially stated that the key to the economic growth experienced by Western Europe was their ability to import and implement technology from the United States. The growth rate of a developing country is going to be higher than the growth rate of a developed country because the diminishing return of the developing countries is much lower than the developed countries. If a country is trying to be industrialized, they can only be better off. They will grow much faster than the countries that are already industrialized. In the process they are creating more jobs, and more capital, which leads economy total revenue increasing at an increasing rate.

Limitation to Catch-up Growth

Abramovitz does not grantee that the poor countries will catch-up to the developed countries, because the poor countries might fail to adopt to the technology, attract capital and participate in global market.

If a country cannot adopt to the technology they are being offered, they will not be able to generate more capital which will lead to failure of the catch-up process. Also, if the poor country is not building relationships globally with developed countries, again they will fail. Building relationship with developed countries is extremely important because those are the countries that will purchase most of developing countries' capital. If the developing country sells more capital, they will grow. If they start to grow, they will catch-up.

The Role of Inventories in Business Cycles

During his time at the National Bureau of Economics Research, Dr. Abramovitz researched the role inventories play in the business cycles. A business cycle is the fluctuation in economic activity that an economy experiences over a period of time. The experience could be good, such as a boom and expansion in the economy, or bad, such as a recession or depression. Dr. Abramovitz expressed his opinion on the role the inventory plays in these business cycles in his paper "The Role of Inventories in Business Cycles." He states that inventory can play a negative role if there is a lag in the production of the inventory. The lag can occur for the following reasons:

1. Different goods need to be produced to create one whole product. For example, to manufacture a car, several different kinds of goods are needed. If there is a lag in obtaining any of those goods, it will slow down the production of the car. This would mean that the market is not meeting the demand of the buyers, which would lead to less revenue generated by the market.
2. Raw materials purchased from domestic manufacturers or dealers may lag by a few months. For example, to make fabric, many different types of raw material are required, such as cotton, nylon, wool, polyester and many more. If the domestic manufacturers or dealers are unable to produce the raw material on time, the market will take a hit because they will not meet the demand.
3. Raw materials purchased from distant sources or on long-term contracts may also have a delayed arrival. When domestic manufacturers and dealers cannot produce enough, the nation has to reach out to other nations for the raw materials, which takes much longer. Hence, this can also lead to the market lacking products consumers want.
4. Finished goods made to order are closely tied to output. Let's say the raw material was received on time and goods were produced and made available to purchase on time. But what if the inventory is not enough? Then the producer would have to produce more, which will again require starting from scratch. Meanwhile, the market does not have any goods to sell, which again result in a shortage.

Aggregate inventories of wholesalers and retailers also appear to have lagged behind sales by about six months, and detailed studies reveal that the lag of total distributor stocks reflects great differences in the ability of merchants in different trades to keep the rate at which they receive goods in line with the rate at which they can dispose of them. It must be expected, therefore, that the ability of some merchants to adjust inventories to sales is so limited as to produce a long lag of stocks behind sales or even an inverse relationship between sales and inventories. If these various lags are worked out, a nation can stop the negative effect of inventories on the national market.

Publications

Selected publications in chronological order:

• 1939: Price Theory for a Changing Economy
• 1948: Role of Inventories in Business Cycles
• 1950: Inventories and Business Cycles
• 1954: (with V. Eliasberg) The Trend of Public Employment in Great Britain
• 1956: Resource and Output Trends in the US since 1870
• 1959: The Welfare Interpretation of Secular Trends in National Income and Product
• 1959: The allocation of economic resources: essays in honor of Bernard Francis Haley. Stanford, California: Stanford University Press. OCLC 287348.
• 1959: Abramovitz, Moses; et al. (eds.), "The welfare interpretation of secular trends in national income and product", The Allocation of Economic Resources: Essays in Honor of Bernard Francis Haley, Stanford, California: Stanford University Press, OCLC 490147128. {{citation}}: Invalid |ref=harv (help)
• 1961: The nature and significance of kuznets cycles
• 1964: Evidences of long swings in aggregate construction since the Civil War
• 1968: The passing of kuznets cycles
• 1973: (with David, Paul) Reinterpreting economic growth: parables and realities
• 1979: Rapid growth potential and its realization
• 1979: Economic growth and its discontents
• 1986: Catching up, forging ahead and falling behind
• 1993: Thinking about growth and other essays
• The search for the sources of growth: areas of ignorance, old and new
• 1996: (with David, Paul) Convergence and deferred catch up
• 1999: What economists don't know about growth

External links

• Abramovitz' memoirs