A model on knowledge and endogenous growth, Vol. 1 of 1

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A model on knowledge and endogenous growth

Author:	Hiau Looi Kee; Chen, Derek H. C.;	Collection Title:	Policy, Research working paper ; no. WPS 3539
Country:	World;	Date Stored:	2005/03/17
Document Date:	2005/03/01	Document Type:	Policy Research Working Paper
Language:	English	Region:	The World Region
Report Number:	WPS3539	SubTopics:	Achieving Shared Growth; Governance Indicators; Economic Theory & Research; Health Monitoring & Evaluation; Economic Growth
Volume No:	1 of 1

Summary: The authors present a model of endogenous growth in which the main engine of economic development is knowledge. Using a two-sector closed economy model that comprises of a conventional goods-producing sector and a research and development sector, their model incorporates two key aspects of knowledge: technology and human capital. Steady-state equilibrium conditions show that the growth rate of per capita income hinges on the growth rate of human capital. While the growth rate of human capital has been previously shown to affect the growth of the economy in transition between steady states or balanced growth paths, the authors are the first to link the growth rate of human capital to the steady-state growth rate of productivity and output per worker. Furthermore, this result does not exhibit scale effects or policy invariance, both of which have been longstanding concerns with the predictions of endogenous growth models developed in the 1990s.


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