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In the first part of this paper we recall the main features of the longwaves theory, a theory that, at the present stage of development of economic thought, is in our view the most valuable to understand the present situation and, consequently, offers the best guidance for economic policy. In the second part we shall outline some possible policy implications that can be derived from such an approach.
1. The long waves in economic development
1.1. The facts
A growing number of economic historians agree that long-term economic development of capitalist economies is an uneven phenomenon: periods of sustained growth of output and trade of about 25 to 30 years are followed by periods of slow or stagnating growth of analogous duration. Similar movements also appear in prices and other monetary variables. Up to now Western economies experienced four long waves and at present we entered into the fifth one. Table 1 summarises these movements.1
Long waves start in some 'core' countries, or technological leaders, and then spread to other economies, reaching the less developed regions only later on. As table 1 indicates, the first long wave originated from the early mechanisation (the industrial revolution); the technological leaders were Britain, France and Belgium, followed by the German states and the Netherlands. The second long wave was the era of steam power and railways, the technological leaders being the same as the first long wave plus Germany and the USA, and the followers were Italy, the Netherlands, Switzerland and Austria-Hungary. The third long wave was the era of electrical and heavy engineering. The earlier leaders succeeded in keeping their position, a position that they shared with Switzerland and the Netherlands that were thus 'upgraded' with respect to the previous wave. Italy and AustriaHungary continued to play the role of followers, joined by Canada, Japan, Russia and two European Nordic countries (Sweden and Denmark). It was during this wave that Taylorism appeared. The fourth long wave was the era of mass production (the Fordism)2 that spread all over Western Europe, the USA, USSR, Japan and Australia. The followers were located in Eastern Europe, Asia (Korea, China, India Taiwan), as well as in Central and South America (Mexico, Brazil, Argentina, Venezuela). The present fifth long wave is...