Ideas and Growth
Robert E. Lucas Jr.
University of Chicago - Department of Economics; National Bureau of Economic Research (NBER)
NBER Working Paper No. w14133
What is it about modern capitalist economies that allows them, in contrast to all earlier societies, to generate sustained growth in productivity and living standards? It is widely agreed that the productivity growth of the industrialized economies is mainly an ongoing intellectual achievement, a sustained flow of new ideas. Are these ideas the achievements of a few geniuses, Newton, Beethoven, and a handful of others, viewed as external to the activities of ordinary people? Are they the product of a specialized research sector, engaged in the invention of patent-protected processes over which they have monopoly rights? Both images are based on important features of reality and both have inspired interesting growth theories, but neither seems to me central. What is central, I believe, is that fact that the industrial revolution involved the emergence (or rapid expansion) of a class of educated people, thousands–now many millions–of people who spend entire careers exchanging ideas, solving work-related problems, generating new knowledge.
Number of Pages in PDF File: 35working papers series
Date posted: June 30, 2008
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