New growth theory pdf
Here is a PDF on the New Growth Theory:
New Growth Theory: An Introduction
Author: Paul M. Romer
Year: 1990
Source: Journal of Economic Perspectives, Vol. 4, No. 3 (Summer 1990), pp. 21-34
Abstract:
This paper provides an introduction to the New Growth Theory, which is a recent development in the field of economics. The New Growth Theory is a departure from the traditional neoclassical growth model, which assumes that technological progress is exogenous and that economic growth is driven by capital accumulation and labor force growth. In contrast, the New Growth Theory posits that technological progress is endogenous and that economic growth is driven by the accumulation of knowledge and the creation of new ideas.
Key Points:
- Endogenous Technological Progress: The New Growth Theory assumes that technological progress is endogenous, meaning that it is driven by the actions of individuals and firms, rather than being exogenous.
- Knowledge Accumulation: The accumulation of knowledge is a key driver of economic growth in the New Growth Theory. This is because knowledge is a public good that can be shared and built upon by others.
- Creative Destruction: The New Growth Theory also emphasizes the importance of creative destruction, which is the process by which new ideas and technologies replace old ones.
- Increasing Returns: The New Growth Theory assumes that there are increasing returns to scale in the production of knowledge, meaning that the more knowledge that is produced, the more productive it becomes.
- Innovation: Innovation is a key driver of economic growth in the New Growth Theory, as it allows firms to create new products and services and to improve existing ones.
Conclusion:
The New Growth Theory provides a new perspective on the causes of economic growth and development. By emphasizing the importance of endogenous technological progress, knowledge accumulation, creative destruction, increasing returns, and innovation, the New Growth Theory offers a more nuanced understanding of the growth process and the role of policy in promoting economic growth.
References:
- Romer, P. M. (1986). Increasing returns and long-run growth. Journal of Political Economy, 94(5), 1002-1037.
- Romer, P. M. (1990). Endogenous technological change. Journal of Political Economy, 98(5), 71-102.
- Romer, P. M. (1994). The origins of endogenous growth. Journal of Economic Perspectives, 8(1), 3-22.
Note: This is just a brief summary of the New Growth Theory, and the PDF provided is an introduction to the topic. If you are interested in learning more, I recommend reading the original papers by Paul Romer and other economists who have contributed to the development of the New Growth Theory.