Non‐Scale Endogenous Growth with R&D and Human Capital. (21st January 2016)

• Record Type: Journal Article
• Authors: Day, Creina
• Is Part Of: Scottish journal of political economy. Volume 63:Number 5(2016)
• Page Start: 443
• Page End: 467
• Publication Date: 2016-01-21
• Subjects: Great Britain -- Economic conditions -- 1945-1964 -- Periodicals; Great Britain -- Economic conditions -- 1964-1979 -- Periodicals; Great Britain -- Economic conditions -- 1979-1997 -- Periodicals; 330.9411005
• DOI: 10.1111/sjpe.12115
• Languages: English
• ISSNs: 0036-9292

Abstract

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.