SUMMARYDefining steady‐state growth as stationary proportionate rates of growth, defining balanced growth as stationary mutual proportions between physical output of all goods, defining equilibrium as zero excess demand, and defining stability as a tendency for equilibrium to restore itself if disturbed, the paper tests a neoclassical two‐country growth model for steady state, balance, and stability. The model uses prices and the exchange rate as equilibrating variables and admits consumer preferences, disparity of rates of technological progress, and disparity of rates of growth of labor forces. Growth is found to be steady‐state, unbalanced, and s