The bar I set for a model is that it should yield answers we believe to questions that matter. For a model of growth, the two questions that matter most are:
1. Speeding-up: Why has the rate of growth at the technological frontier been increasing over time?
2. Missed Opportunities: Why have so many countries that start from far behind the frontier failed to achieve rapid catch-up growth?
This month, I’m writing a series of posts in response to a nudge from Joshua Gans noting that this is the 25th anniversary of the publication of my paper Endogenous Technological Change, JPE (1990). In this post, I’ll recapitulate the evidence that convinced me when I was writing the 1990 paper that these are the two big questions that growth theory should address. In a subsequent post, I’ll explain why the conceptual framework that I used in the 1990 paper, one that relies on partially excludable nonrival goods, is the bare minimum for answering them.Interestingly, this is similar to the model that China used in playing catch up. So did the USSR, whose progress in industrializing a chiefly agricultural economy is usually underestimated in the West. Public enterprise also the field in which Mariana Mazzucato has been working.
For reference, see Public Goods.
Paul Romer's Blog
Speeding-up and Missed Opportunities: Evidence
Paul Romer | University Professor at NYU and director of the Marron Institute of Urban Management
ht Brad DeLong
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