ABSTRACT
Transformational Growth is the process by which an economy comes to be dominated by mass production technology, replacing the old craft technology. However, this transformation only comes about through an incremental and cumulative process. Specifically, the transformation does not occur across all industries simultaneously. Rather, the division of labor and the application of mass production in one industry is affected by and in turn affects the same process occurring in other industries. Three sets of transfers across industries are crucial to this cumulative spread of mass-production technology: transfers of organizational ability; transfers of technological capacity; and transfers of demand. The US economy during World War II provides a unique example which enables us to observe the relations between these various transfers. The economy did not simply use old methods of production to produce more output-a radical transformation occurred. The volume of output needed to fight the war necessitated the adoption of mass-production technology in industries which previously had used craft systems. However, given that Transformational Growth is based on the interplay of these mutually dependent factors, the spread of mass-production technology can be limited by problems in any one of the transfer processes.
