Non‐Scale Endogenous Growth with R&D and Human Capital

25 Pages Posted: 4 Oct 2016

See all articles by Creina Day

Creina Day

Australian National University

Multiple version iconThere are 2 versions of this paper

Date Written: November 2016

Abstract

This paper examines the conditions under which increasing knowledge, encapsulated in ideas for new technology through R&D and embodied in human capital through education, sustains economic growth. A general model is developed where, consistent with recent literature, growth is non‐scale (not increasing in population size) and endogenous (generated by factors within R&D and education). Recent models feature the counterfactual assumption of constant returns to existing knowledge and restrict the substitutability of inputs within R&D and education. We find that non‐scale endogenous growth is possible under less stringent conditions. The findings reconcile sustained economic growth with evidence of diminishing marginal returns in education and R&D, which suggests an ambiguous role for R&D policy.

Suggested Citation

Day, Creina, Non‐Scale Endogenous Growth with R&D and Human Capital (November 2016). Scottish Journal of Political Economy, Vol. 63, Issue 5, pp. 443-467, 2016. Available at SSRN: https://ssrn.com/abstract=2847414 or http://dx.doi.org/10.1111/sjpe.12115

Creina Day (Contact Author)

Australian National University ( email )

7 Liversidge Street
Lennox Crossing
Canberra, ACT 0200
Australia

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