endogenous growth

The Great Convergence: Information Technology and the New Globalization
by Richard Baldwin
Published 14 Nov 2016

This is counterintuitive, but the logic is nonetheless airtight. Firms become more (not less) footloose when trade costs are low. Endogenous Growth Takeoffs and Economic Geography The static NEG reasoning discussed hereto is a useful indicator as to the direction things may move, but globalization’s headline events involved growth rates—not just one-off shifts. Fortunately, connecting location and growth is quite simple. The big breakthrough Paul Romer made when he launched the endogenous growth theory in the 1980s was conceptual and mathematical. The mathematical part is of no interest here and the conceptual part is so simple it is hard to believe no one had thought of it before Romer.

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One of these was pioneered by Paul Krugman with Tony Venables, Masahisa Fujita, and others. It is called the “new economic geography”—even though some people are inclined to dispute whether it is really new and others whether it is really geography. The other 1990s logic set is the so-called endogenous growth theory, which is indisputably new and definitely about growth. The pathbreaker here is, among others, New York University economist Paul Romer. The last analytic framework helps organize thinking about the impact of information and communication technology (ICT) on offshoring. We begin with the logic of comparative advantage.

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Romer’s framework had no distance lever for globalization to pull, but more recent work has bolted on a few such levers. Growth in a Global Economy Distance matters for innovation and growth; Isaac Newton’s innovators can’t get up onto the shoulders of giants if the giants are too far away. Putting this sort of consideration into the framework was done when Gene Grossman and Elhanan Helpman took endogenous growth theory to an international setting in their 1991 book Innovation and Growth in the Global Economy.4 Again, the key insight is simplicity itself. They allowed the growth-promoting knowledge spillovers to cross borders, but only imperfectly. The mechanics can be seen with another small thought experiment.

The Ages of Globalization
by Jeffrey D. Sachs
Published 2 Jun 2020

With GDP equal to 200, more potential Watt-like inventions are explored, and eventually another one is developed that boosts the GDP to 400, causing still more R&D and further innovation. Economists label this self-sustaining process (innovation → larger market size → innovation → larger market size) as “endogenous growth.” The economist Paul Romer provided a rigorous mathematical account of endogenous growth in the 1980s and received the Nobel Prize in Economics for his achievement. The steam engine and the breakthrough to an energy-rich economy set off such a process of endogenous growth that it has so far lasted for more than two centuries. Global GDP per capita, which hardly budged for centuries before the age of industrialization, has been rising rapidly and fairly consistently since 1820.

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Contents Preface 1 Seven Ages of Globalization The Seven Ages The Acceleration of Change Economic Scale and the Pace of Change Malthusian Pessimism The Gradual Transformation to Urban Life The Interplay of Geography, Technology, and Institutions The Favorable Geographies Geopolitics and Globalization Looking Back to See Forward 2 The Paleolithic Age (70,000–10,000 BCE) The First Age of Globalization Cultural Acceleration Human Society in the Upper Paleolithic Some Lessons from the Paleolithic Age 3 The Neolithic Age (10,000–3000 BCE) Diffusion of Agriculture Within Ecological Zones The Early Alluvial Civilizations of Eurasia The Lucky Latitudes Some Lessons from the Neolithic Age 4 The Equestrian Age (3000–1000 BCE) Animal Domestication Domestication of the Donkey and the Horse The Domestication of the Camel and Camelids The Metal Ages Comparing Old World and New World Developments The Yamnaya Breakthrough in Eurasia The Early Equestrian States Key Development Breakthroughs in the Fertile Crescent Some Lessons from the Equestrian Age 5 The Classical Age (1000 BCE–1500 CE) The Axial Age Thalassocracy and Tellurocracy The Emergence of the Classical Land-Based Empires The Han Empire The Developed World as of 100 CE Global Trade Within the Lucky Latitudes The Fall of Rome and the Rise of Islam The Remarkable Song Dynasty of China The Last Hurrahs of the Steppe Conquerors Some Lessons from the Classical Age 6 The Ocean Age (1500–1800) The Great Chinese Reversal The North Atlantic Quest for Ocean Navigation The Columbian Exchange The Gunpowder Age and the High Seas The New European Age of Inquiry The Birth of Global Capitalism Europe’s Scramble for Global Empire Insatiable Greed of the Empire Builders The Intertwining of State and Capital Indigenous Populations and African Slaves in the New World Feeding Europe’s Factories: Cotton Global Empire and Global War Adam Smith’s Summation of the Age of Global Empire Some Lessons from the Ocean Age 7 The Industrial Age (1800–2000) From the Organic Economy to the Energy-Rich Economy Why Did Industrialization Start in Britain? Endogenous Growth and Kondratiev Waves The Diffusion of Industrialization in Europe The Great Global Divergence The Asian Drama: China, India, and Japan Europe Swallows Africa Anglo-American Hegemony The Thirty-Year European Bloodletting The American Century Decolonization and the Onset of Global Convergence Some Lessons from the Industrial Age 8 The Digital Age (Twenty-First Century) The Digital Revolution Convergent Growth and China’s Surge to the Forefront The Challenges of Sustainable Development The Challenge of Inequality The Challenge of Planetary Boundaries The Risks of Conflict Some Lessons from the Digital Age 9 Guiding Globalization in the Twenty-First Century Sustainable Development Social-Democratic Ethos Subsidiarity and the Public Sphere Reforming the United Nations Ethics in Action for a Common Plan Acknowledgments Data Appendix Notes Further Readings Bibliography Index Preface The COVID-19 epidemic hit as this book was going to press.

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The densely settled farm villages eventually offered their own novel rewards. Sedentary lives within larger communities set in train new technological discoveries, in metallurgy, the arts, record keeping, ceramics, and eventually writing, first in cuneiform and pictographs and later with alphabets. Sedentary life in this way set off a chain reaction of endogenous growth, producing a gradual expansion of know-how and an accompanying increase in population. After some time, perhaps millennia, the living standards of the settled farm communities eventually outstripped those of the hunter-gatherer groups, and did so with vastly expanded populations. According to the HYDE 3.1 population estimates, Eurasia’s population rose from just 2 million people around 10,000 BCE to 15 million in 5000 BCE, 60 million in 2000 BCE, and a remarkable 165 million people as of 1 CE.3 Sedentary lives produced a bounty of food and other products that supported a hundredfold rise in population over roughly ten thousand years.

What Would the Great Economists Do?: How Twelve Brilliant Minds Would Solve Today's Biggest Problems
by Linda Yueh
Published 4 Jun 2018

Others disagree and expect that productivity will improve once these new ICT and digital technologies become truly embedded into work practices and businesses. A major challenge to Solow’s view is related to technology. The developers of endogenous growth models from the 1960s onwards criticized Solow for not explaining where technology came from. Endogenous growth models treat technology as determined within the model; in other words, ‘endogenously’ generated by the capital and labour within an economy. The neoclassical Solow model was alleged to treat technological progress as if it were ‘manna from heaven’. By contrast, endogenous growth theories attempt to explain how technological advances come about, raising the productivity of an economy.

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Solow was unconvinced by some of the assumptions of endogenous growth, particularly in its simplest form, known as the AK model. (The ‘A’ in the title of the model refers to the economics shorthand for technology, while ‘K’ refers to capital.) This theory says that the rate of technical improvement in an economy is proportional to its growth rate; in other words, technology and the economy grow at the same rate. Solow thought that process seemed too neat to be plausible. Although they differ in terms of how growth comes about, these models follow the implications set out by the Solow model. Endogenous growth theories extend Solow’s neoclassical model in spelling out how innovators produce technological progress.

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Buccleuch, Henry Scott, 3rd Duke of budget deficits and austerity Burns, Arthur Burns, Mary business cycle theory Fisher Hayek Schumpeter Callaghan, James Cambridge School see also Keynes, John Maynard; Marshall, Alfred; Robinson, Joan Cambridge University Girton College Kings College Newnham College St Johns and women Canon capital accumulation capital investment capitalism in aftermath of 2008 financial crisis and communism derivation of term and Engels and the financial crisis of 2008 free-market and Hayek inequality and capitalist economies laissez-faire see laissez-faire and Marx and the Occupy movement and Schumpeterian ‘creative destruction’ socialism vs welfare state capitalism car industry Carney, Mark Carter, Jimmy Case, Elizabeth central banks Bank of England Bank of Japan European Central Bank Fed see Federal Reserve forward guidance macroprudential policy monetary policy tools see also quantitative easing (QE) Chamberlin, Edward Chicago School see also Friedman, Milton Chile China 1949 revolution asset management companies banking system Beijing Consensus Communist Party corporate debt Cultural Revolution domestic innovation economic transformation ‘effect’/‘price’ employment system entrepreneurs exports Five Year Plan (1953) foreign direct investment (FDI) and Germany industrialization and reindustrialization inequality innovation challenge legal institutions manufacturing Maoism and Marx national debt openness ‘paradox’ poverty reduction privatization R&D investment regional free trade agreement renminbi (RMB) as second largest economy services sector shadow banking smartphones social networks trade-to GDP ratio and the USSR wage increases women Churchill, Winston class Engels’ The Condition of the Working Class in England and Marx middle see middle class and Ricardo wage earner class Classical School of economics see also Mill, John Stuart; Ricardo, David; Smith, Adam Clinton, Bill Clinton, Hillary cloth clothing Coase, Ronald Cold War Collectivist Economic Planning collectivization Collier, Paul Columbia University communism Bolshevik Party and capitalism Chinese Communist League First International Marxism see Marxism and Robinson Socialist/Second International Third International USSR see Soviet Union Vietnamese vs welfare state capitalism Communist League comparative advantage theory competition ‘competing down’ (Schumpeter) imperfect between money providers perfect and Robinson wages and competitiveness computers Conard, Ed construction consultancy firms consumerism consumption and comparative advantage theory consumer spending and marginal utility analysis convergence hypothesis corn, free trade in Corn Laws repeal and Ricardo corporate debt Cowles Commission Crafts, Nicholas crafts credit crunch credit default swaps (CDS) credit rating Crimean War crypto-currencies currency crises first-generation second-generation third-generation currency stability Cyprus death duties debt Chinese corporate debt-deflation spiral and government bonds indexation and protection from and Minsky’s financial instability hypothesis mortgage debt national see national debt private corporate as share of GDP decentralization defence deflation debt-deflation spiral Fisher and combating deflation Japan self-fulfilling deindustrialization and globalization premature reversing/reindustrialization and trade US Deng Xiaoping depression see Great Depression (1930s); Long Depression (1880s); recession/depression diminishing returns to capital distributive lag model Douglas, David, Lord Reston Douglas, Janet DuPont East Asian ‘tiger’ economies see also Hong Kong; Singapore; South Korea; Taiwan eastern Europe Eastman Kodak Econometric Society Econometrica economic development challenges and Beijing Consensus financial/currency crises and institutions and Lewis model Myanmar and North and path dependence poverty eradication/reduction South Africa Sustainable Development Goals Vietnam and Washington Consensus economic equilibrium economic freedom economic growth and austerity barriers convergence hypothesis development challenges see economic development challenges drivers of 2 see also innovation; institutions; public investment; technology endogenous growth theories inclusive growth through investment Japan’s growth and Japan’s ‘lost decades’ Lewis model mercantilist doctrine of and new technologies policy debates on raising and poverty reduction and productivity debate/challenge slow growth and the future Solow model UK government’s renewed focus on and unemployment Economic Journal economic rent Ricardo’s theory of economies ‘animal spirits’ of crises see financial crises deflation see deflation emerging see emerging economies equilibrium in GDP see gross domestic product global macroeconomic imbalances growth of see economic growth inequality and capitalist economies inflation see inflation and international trade and investment see investment; public investment national debt see national debt QE see quantitative easing rebalancing of recession see recession/depression services economy see services sector and stagnant wages state intervention Economist education higher role in reducing inequality universal Eliot, T.

Cogs and Monsters: What Economics Is, and What It Should Be
by Diane Coyle
Published 11 Oct 2021

(One of my tasks in the Treasury was writing an explainer about derivatives for senior officials and ministers, which was certainly an education for me too.) By 2005, the orthodoxy had changed substantially—at least in the academic world. The Soulful Science is a description of what had changed. For example, the intervening twenty years had seen the introduction of endogenous growth theory (Romer 1986a), which linked economic growth to education and intellectual property rather than taking it as due to unexplained technical progress; and a broad appreciation of the role of institutions, or in other words historical and political context, in growth and in economic development (Acemoglu and Robinson 2012).

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Network effects mean individual consumption decisions are bound to affect those of other people. ‘My’ data is valuable to you as well as to Google. Yet even as the scope of increasing returns to scale in the economy has manifestly grown, interest in the phenomenon among economists has until recently been confined to just certain areas of research. Endogenous growth theory (Romer 1994) puts increasing returns at the heart of the process of growth over time, through knowledge generated in one firm spilling over to others. But this important insight has had a perhaps surprisingly limited impact. In particular, the workhorse growth accounting approach to the measurement of total factor productivity assumes constant returns to scale at an aggregate level.

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Rogoff, K., 2019, ‘Modern Monetary Nonsense’, https://www.project-syndicate.org/commentary/federal-reserve-modern-monetary-theory-dangers-by-kenneth-rogoff-2019–03, accessed 6 August 2020. Romer, P. M., 1986a, ‘Increasing Returns and Long-Run Growth’, Journal of Political Economy, 94 (5), 1002–1037. Romer, P. M., 1986b, ‘Endogenous Technological Change’, Journal of Political Economy, 98 (5), S71–S102. Romer, P., 1994, ‘The Origins of Endogenous Growth’, Journal of Economic Perspectives, 8 (1), 3–22. Romer, Paul M., 2015, ‘Mathiness in the Theory of Economic Growth’, American Economic Review, 105 (5), 89–93. Rosen, Sherwin, 1981, ‘The Economics of Superstars’, American Economic Review, 71 (5), 845–858. Rosenthal, C., 2018, Accounting for Slavery: Masters and Management, Cambridge, MA: Harvard University Press.

Rethinking Capitalism: Economics and Policy for Sustainable and Inclusive Growth
by Michael Jacobs and Mariana Mazzucato
Published 31 Jul 2016

Public goods might include clean air, national defence, basic research, all of which create benefits, positive externalities, for the wider community besides the agent investing in it. 5 R. Nelson and S. Winter, ‘An Evolutionary Theory of Economic Change’, 1984, Cambridge, MA, Harvard University Press; P. M. Romer, ‘The Origins of Endogenous Growth’, The Journal of Economic Perspectives, vol. 8, no. 1, 1994, pp. 3–22. 6 C. Freeman, Technology Policy and Economic Performance: Lessons from Japan, London, Pinter, 1987. 7 B.-A. Lundvall, ‘Introduction’, in B.-A. Lundvall, ed. National Systems of Innovation: Towards a Theory of Innovation and Interactive Learning, London, Pinter, 1992, pp. 1–20. 8 SSTI, ‘The Changing Nature of U.S.

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For this we need to draw on much richer veins of evolutionary and institutional economic thought about the dynamics of change in economic systems. We need to understand the basis of growth in innovation, and the role of path-dependence in system transformation. Innovation and growth Technological innovation has long been recognised as one of the core drivers of economic growth, but in modern theories of endogenous growth it is given a pre-eminent role.14 Investment in innovation—in human capital, research and development (R&D) and knowledge—is the key not just to productivity improvement but to an expansion in the ways in which value can be created. This is crucial to solving the climate change problem. A long tradition in environmentalism has argued that the quest to remain within the planet’s ecological limits must inevitably mean an end to growth.

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It depends on the path of innovation: not just on how far new technologies and systems of production, distribution and consumption can raise output while reducing environmental impact, but on how far economic value can be created out of knowledge and information. Unlike material resources, knowledge does not deplete. Indeed, knowledge builds on knowledge: one of the sources of endogenous growth is that constant or increasing returns to ideas can overcome diminishing returns to physical capital.17 It is very hard to unlearn what has been learned and intellectual capital accumulates, so technical progress tends to push productivity ever upwards. As Isaac Newton famously acknowledged, he saw further only by ‘standing on the shoulders of giants’.

Blue Ocean Strategy, Expanded Edition: How to Create Uncontested Market Space and Make the Competition Irrelevant
by W. Chan Kim and Renée A. Mauborgne
Published 20 Jan 2014

Market structure, given by supply and demand conditions, shapes sellers’ and buyers’ conduct, which, in turn, determines end performance.2 Systemwide changes are induced by factors that are external to the market structure, such as fundamental changes in basic economic conditions and technological breakthroughs.3 The reconstructionist view of strategy, on the other hand, is built on the theory of endogenous growth. The theory traces back to Joseph A. Schumpeter’s initial observation that the forces that change economic structure and industry landscapes can come from within the system.4 Schumpeter argues that innovation can happen endogenously and that its main source is the creative entrepreneur.5 Schumpeterian innovation is still black-boxed, however, because it is the product of the ingenuity of entrepreneurs and cannot be reproduced systematically.

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Absent this, knowledge and ideas cannot be deployed in action to produce innovation and growth at the firm level. The reconstructionist view takes off where the new growth theory left off. Building on the new growth theory, the reconstructionist view suggests how knowledge and ideas are deployed in the process of creation to produce endogenous growth for the firm. In particular, it proposes that such a process of creation can occur in any organization at any time by the cognitive reconstruction of existing data and market elements in a fundamentally new way. These two views—the structuralist and the reconstructionist—have important implications for how companies act on strategy.

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Scherer builds on Bain’s work and seeks to spell out the causal path between “structure” and “performance” by using “conduct” as an intervening variable. For more discussions, see Scherer (1970). 3 Ibid. 4 See Joseph A. Schumpeter (1975). 5 Ibid. 6 For more discussions on the new growth theory and endogenous growth, see Paul Romer (1990, 1994) and G. M. Grossman and E. Helpman (1995). 7 For detailed discussions on competitive strategy, see Porter (1980, 1985, 1996). 8 See Kim and Mauborgne (1997a, 1999a, 1999b, 2009). 9 See Joseph Schumpeter (1934) and Andrew Hargadon (2003). 10 For a fuller discussion on this, see the red ocean trap ten in chapter 11. 11 While these two concepts are distinct, the methods associated with them can be used in a complementary manner.

The Great Economists: How Their Ideas Can Help Us Today
by Linda Yueh
Published 15 Mar 2018

Others disagree and expect that productivity will improve once these new ICT and digital technologies become truly embedded into work practices and businesses. A major challenge to Solow’s view is related to technology. The developers of endogenous growth models from the 1960s onwards criticized Solow for not explaining where technology came from. Endogenous growth models treat technology as determined within the model; in other words, ‘endogenously’ generated by the capital and labour within an economy. The neoclassical Solow model was alleged to treat technological progress as if it were ‘manna from heaven’. By contrast, endogenous growth theories attempt to explain how technological advances come about, raising the productivity of an economy.

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Solow was unconvinced by some of the assumptions of endogenous growth, particularly in its simplest form, known as the AK model. (The ‘A’ in the title of the model refers to the economics shorthand for technology, while ‘K’ refers to capital.) This theory says that the rate of technical improvement in an economy is proportional to its growth rate; in other words, technology and the economy grow at the same rate. Solow thought that process seemed too neat to be plausible. Although they differ in terms of how growth comes about, these models follow the implications set out by the Solow model. Endogenous growth theories extend Solow’s neoclassical model in spelling out how innovators produce technological progress.

Economics Rules: The Rights and Wrongs of the Dismal Science
by Dani Rodrik
Published 12 Oct 2015

But which reforms, among the long list above, fit the bill? The answer depended on the favored model of growth. Those of us who looked at growth from the perspective of the “neoclassical model” emphasized the supply of physical and human capital and the barriers it faced. Those who preferred “endogenous” growth models, in which growth is driven by investment in new technologies, homed in on the environment for market competition and innovation. Those who had worked intensively with models that put institutional quality at center stage concentrated on property rights and contract enforcement. Those who were steeped in “dual economy” models would look at the conditions for structural transformation and the transition from traditional economic activities such as subsistence agriculture to modern firms and industries.

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“fox” approaches in, 175 ignorant vs. calculating peasant hypotheses in, 75 individual behavior in, 17, 33, 39, 42, 49, 101, 102, 131, 137, 181–82 marginalists and, 119–22 models in, see models outsider views in, 6 pluralism in, 196–208 points of consensus in, 147–52, 194–95 power and responsibility and, 174–75 predictability in, 6, 26–28, 38, 40–41, 85, 104, 105, 108, 115, 132, 133, 139–40, 157, 175, 184–85, 202 progressive modeling in, 63–72 psychology and sociology of, 167–74 self-interest in, 21, 104, 158, 186–88, 190 shocks in, 130–31, 132 social sciences and, xii–xiii, 45, 181–82, 202–7 strengths and weaknesses of, xi supply and demand in, 3, 13–14, 20, 99, 119, 122, 128–30, 136–37, 170 trade-offs in, 193–94 twenty commandments for, 213–15 values in, 186–96 see also markets; models Economics, Education and Unlearning: Economics Education at the University of Manchester (PCES), 197n education: antipoverty programs and, 4, 55, 105–6 field experiments and variable factors in, 24 markets and, 198 models in, 36–37, 173 efficient-markets hypothesis (EMH), 156–58 Einstein, Albert, 80, 81, 113, 179 El Salvador, 86, 92–93 Elster, Jon, 79n emissions quotas, 188–90, 191–92 empirical method, models and, xii, 7, 46, 65, 72–76, 77–78, 137, 173–74, 183, 199–206 employment: in business cycles, 125–37 labor productivity and, 123 minimum wages and, 17–18, 28n, 114, 115, 124, 143, 150, 151 social and cultural considerations in, 181 see also unemployment endogenous growth models, 88 England, comparative advantage principle and, 52–53 entrepreneurs: corruption and, 91 taxation and, 74 Ethiopia, 86, 123 Europe: Great Recession in, 153, 156 income inequality in, 125, 139 trade agreements between U.S. and, 41 European Common Market, 59 European Union (EU), 76 evolution, theory of, 113–14 exchange rates, 2, 100, 149 experiments: economic models compared with, 21–25 field types of, 23–24, 105–8, 173, 202–5 Explaining Social Behavior: More Nuts and Bolts for the Social Sciences (Elster), 79n external validity, 23–24, 112 fables, models and, 18–21 factor endowments theory, 139–40 Fama, Eugene, 157, 159 Fassin, Didier, xiv Federalists, 187 Federal Reserve, U.S., 134–35, 151n, 158 Feenstra, Rob, 141 field experiments, 23–24, 105–8, 173, 202–5 financial costs, 70 financial industry: globalization of, 164–67 in Great Recession, 152–59, 184 financial markets, deregulation and, 143, 155, 158–59, 162 “Fine Is a Price, A” (Gneezy and Rustichini), 71n fines, 71 First Fundamental Theorem of Welfare Economics, 47–51, 54 fiscal policies, 75–76, 87, 88, 147–48, 149, 160–61, 171 Fischer, Stanley, 165–66 forward causation, 115 Foundations of Economic Analysis (Samuelson), 125 Fourcade, Marion, 79n, 200n France, comparative advantage principle and, 59–60 Freakonomics (Levitt and Dubner), 7 Free to Choose, 49 free trade, 11, 54, 141, 169, 170, 182–83, 194 Friedman, Milton: on assumptions in modeling, 25–26 on cigarette taxes, 27–28 on invisible hand theorem, 49 on liquidity and Great Depression, 134 on model complexity, 37 fuel subsidies, 193 functional distribution of income, 121 Galbraith, John Kenneth, 184 Galileo Galilei, 29 Gambetta, Diego, 34 game theory, 5, 14–15, 33, 36, 61–62, 103–4, 133 simultaneous vs. sequential moves in, 68 garment industry, general-equilibrium effects in, 57–58 Gelman, Andrew, 115 general-equilibrium interactions, 41, 56–58, 69n, 91, 120 General Theory of Second Best, 58–61 Germany, comparative advantage principle and, 59–60 Gibbard, Allan, 20 Gilboa, Itzhak, 72, 73 Gini coefficient, 138 globalization, 139–41, 143, 164–67, 184 Gneezy, Uri, 71n Gold Standard, 2, 127 goods and services, economic models and, 12 Gordon, Roger, 151n Grand Theory of Employment, Interest, and Money, The (Keynes), 128 greenback era, 127n Greenspan, Alan, 158, 159 gross domestic product (GDP), 151n labor productivity and, 123 growth diagnostics, 86–93, 90, 97, 110–11 Haldane, Andrew, 197 Hamilton, Alexander, 187 Hanna, Rema, 107 Hanson, Gordon, 141 Harvard University, xi, 111, 136, 149, 197, 198 Hausmann, Ricardo, 111 health care: in antipoverty programs, 4, 105–7 models and, 5, 36–37, 105–7 Heckscher, Eli, 139 Herndon, Thomas, 77 Hicks, John, 128, 133 Hiebert, Stephanie, xv Hirschman, Albert O., 144–45, 195, 210n–11n housing bubble, 153–54, 156 human capital, 87, 88, 92 Humphrey, Thomas M., 13n Hunting Causes and Using Them: Approaches in Philosophy and Economics (Cartwright), 22n import quotas, 149 incentives, 7, 170, 172, 188–92 income: functional distribution of, 121 military service and, 108 personal distribution of, 121 income inequality, 117, 124–25, 138–44, 147–49 deregulation in, 143 factor endowments theory in, 139–40 Gini coefficient and, 138 globalization in, 139–41, 143 in manufacturing, 141 offshoring in, 141 skill premium in, 138–40, 142 skill upgrading in, 140, 141, 142 technological change in, 141–43 trade in, 139–40 India, 107, 154 Indonesia, 166 industrial organization, 201 industrial revolution, 115 industry: developing economies and policies on, 75–76, 87, 88 government intervention and, 34–35 inflation, 185 in business cycles, 126–27, 130–31, 133, 135, 137 public spending and, 114 infrastructure, 87, 91, 111, 163 Institute for Advanced Study (IAS), xii–xiii, xiv School of Social Science at, xii Institute for International Economics, 159 institutions: development economics and, 98, 161, 202, 205–7 labor productivity and, 123 insurance, banking and, 155 interest rates, 39, 64, 110, 129–30, 156, 161 internal validity, 23–24 International Bank for Reconstruction and Development, 2 see also World Bank international economics, 201–2 International Monetary Fund (IMF), 1n, 2 Washington Consensus and, 160, 165 Internet, big data and, 38 “Interview with Eugene Fama” (Cassidy), 157n investment: business cycles and, 129–30, 136 foreign markets and, 87, 89, 90, 92, 165–67 income inequality and, 141 savings and, 129–30, 165–67 Invisible Hand Theorem, 48–50, 51n, 182, 186 Israel, 103, 188 day care study in, 71, 190–91 Japan: city growth models and, 108 income inequality and, 139 Jenkins, Holman W., Jr., 135n Jevons, William Stanley, 119 Kahneman, Daniel, 203 Kenya, 106–7 Keynes, John Maynard, 1–2, 31, 46, 165 on business cycles, 127–37 on liquidity traps, 130 see also models, Keynesian types of Klemperer, Paul, 36n Klinger, Bailey, 111n Korea, South, 163, 164, 166 Kremer, Michael, 106–7 Krugman, Paul, 136, 148 Kuhn, Thomas, 64n Kupers, Roland, 85 Kydland, Finn E., 101n labor markets, 41, 52, 56, 57, 92, 102, 108, 111, 119, 163 labor productivity, 123–24, 141 labor theory of value, 117–19 Lancaster, Kelvin, 59 Latin America, Washington Consensus and, 159–63, 166 Leamer, Edward, 139 learning, rule-based vs. case-based forms of, 72 Leijonhufvud, Axel, 9–10 Lepenies, Philipp H., 211n leverage, 154 Levitt, Steven, 7 Levy, Santiago, 3–4, 105–6 Lewis, W.

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Arthur, 32–33 “Life among the Econ” (Leijonhufvud), 9–10 Lincoln, Abraham, 52 Lipsey, Richard, 59 liquidity, 134–35, 155, 185 liquidity traps, 130 locational advantages, 108 London, England, congestion pricing and, 3 Lucas, Robert, 130, 131–32, 134–36 “Machiavelli’s Mistake: Why Good Laws Are No Substitute for Good Citizens” (Bowles), 71n macroeconomics, 39–40, 87, 102, 107, 143, 157n, 181 business cycles and, 125–37 capital flow and, 165–66 classical questions of, 101 demand-side view of, 128–30, 136–37 globalization and, 165–66 Madison, James, 187 Mäki, Uskali, 22n malaria, randomized testing and, 106, 204 Malthus, Thomas, 118 Manchester University, 197 Mankiw, Greg, 149, 150, 171n, 197 manufacturing: economic growth and, 163–64 exchange rate and, 100, 163 income inequality and, 141 marginal costs, 121, 122 marginalist economics, 119–22 marginal productivity, 120–21, 122–25 marginal utility, 121, 122 Mariel boatlift (1980), 57 market design models, 5 “Market for ‘Lemons’, The” (Akerlof), 69n market fundamentalism, 160, 178 markets: asymmetric information in, 68–69, 70, 71 behavioral economics and, 69–71, 104–7, 202–4 economic models and, see models economics courses and, 198 economists’ bias toward, 169–71, 182–83 efficiency in, xiii, 14, 21, 34, 48, 50, 51, 67, 98, 125, 147, 148, 150, 156–58, 161, 165, 170, 192–95, 196 general-equilibrium interactions in, 41, 56–58, 69n, 91, 120 in Great Recession, 156–59 imperfectly competitive types of, 67–69, 70, 136, 150, 162 incentives in, 7, 170, 172, 188–92 institutions and, 98, 161, 202 likely outcomes in, 17–18 multiple equilibria in, 16–17 perfectly competitive types of, 21, 27, 28, 47, 69n, 71, 122, 180 prisoners’ dilemma in, 14–15, 20, 21, 61–62, 187, 200 self-interest in, 21, 104, 158, 186–88, 190 social cooperation in, 195–96 supply and demand in, 13–14, 20, 99, 119, 122, 128–30, 136–37, 170 values in, 186–96 Washington Consensus and, 159–67, 169 Marshall, Alfred, 13n, 32, 119 “Marshallian Cross Diagrams and Their Uses before Alfred Marshall: The Origins of Supply and Demand Geometry” (Humphrey), 13n Marx, Groucho, 26 Marx, Karl, xi, 31, 116, 118 Massachusetts, University of (Amherst), 77 Massachusetts Institute of Technology (MIT), 107, 108, 165, 206 mathematical economics, 35 mathematical optimization, 30, 101, 202–3 mathematics: economic models and, 29–37, 47 social sciences and, 33–34 Maxwell’s equations, 66n Meade, James, 58 methodological individualism, 181 Mexico: antipoverty programs in, 3–4, 105–6 globalization and, 141, 166 microeconomics, 125–26, 131 microfounded models, 101 Miguel, Ted, 106–7 Milan, Italy, congestion pricing and, 3 Milgrom, Paul, 36n minimum wages, employment and, 17–18, 28n, 114, 115, 124, 143, 150, 151 Minnesota, University of, 131 Mishel, Lawrence, 124n models: authority and criticism of, 76–80 big data and, 38–39, 40 causal factors and, 40–41, 85–86, 99–100, 114–15, 179, 184, 200, 201, 204 coherent argument and clarity in, 80–81 common sense in, 11 comparative advantage principle and, 52–55, 58n, 59–60, 139, 170 compensation for risk and, 110 computers and, 38, 41 contextual truth in, 20, 174 contingency and, 25, 145, 173–74, 185 coordination and, 16–17, 42, 200 critical assumptions in, 18, 26–29, 94–98, 150–51, 180, 183–84, 202 criticisms of, 10–11, 178, 179–85 decision trees and, 89–90, 90 diagnostic analysis and, 86–93, 90, 97, 110–11 direct implications and, 100–109 dual economy forms of, 88 efficient-markets hypothesis and, 156–58 empirical method and, xii, 7, 46, 65, 72–76, 77–78, 137, 173–74, 183, 199–206 endogenous growth types of, 88 experiments compared with, 21–25 fables compared with, 18–21 field experiments and, 23–24, 105–8, 173, 202–5 general-equilibrium interactions and, 41, 56–58, 69n, 91, 120 goods and services and, 12 Great Recession and, 155–59 horizontal vs. vertical development and, 64n, 67, 71 hypotheses and, 46, 47–56 imperfectly competitive markets and, 67–69, 70, 136, 150, 162 incidental implications and, 109–11 institutions and, 12, 98, 202 intuition and, 46, 56–63 Keynesian types of, 40, 88, 101, 102, 127–30, 131, 133–34, 136–37 knowledge and, 46, 47, 63–72 main elements of, 31 mathematics and, 29–37, 47 neoclassical types of, 40, 88, 90–91, 121, 122 new classical approach to, 130–34, 136–37 parables and, 20 partial-equilibrium analysis and, 56, 58, 91 perfectly competitive markets and, 21, 27, 28, 47, 69n, 71, 122, 180 predictability and, 26–28, 38, 40–41, 85, 104, 105, 108, 115, 132, 133, 139–40, 184–85, 202 principle-agent types of, 155 questions and, 114–16 rationality postulate and, 202–3 real world application of, 171–72 rules of formulation in, 199–202 scale economy vs. local advantage in, 108 scientific advances by progressive formulations of, 63–72 scientific character of, 45–81 second-best theory and, 58–61, 163–64, 166 selection of, 83–112, 136–37, 178, 183–84, 208 simplicity and specificity of, 11, 179–80, 210 simplicity vs. complexity of, 37–44 social reality of, 65–67, 179 static vs. dynamic types of, 68 strategic interactions and, 61–62, 63 of supply and demand, 3, 13–14, 20, 99, 119, 122, 128–30, 136–37 theories and, 113–45 time-inconsistent preferences in, 62–63 tipping points arising from, 42 in trade agreements, 41 unrealistic assumptions in, 25–29, 180–81 validity of, 23–24, 66–67, 112 variety of, 11, 12–18, 26, 68, 72, 73, 114, 130, 198, 202, 208, 210 verbal vs. mathematical types of, 34 verification in selection of, 93–112 see also economics; macroeconomics; markets “Models Are Experiments, Experiments are Models” (Mäki), 22n monetary policies, 87 monopolies, 161 in imperfectly competitive markets, 67–68 in perfectly competitive markets, 122 price controls and, 28, 94–97, 150 Montesquieu, Charles-Louis de Secondat, Baron de La Brède et de, 196 mortality rates, 206 mortgage-backed securities, 155 mortgage finance, 39, 155 mosquito nets, randomized testing of, 106, 204 “Mr.

The Entrepreneurial State: Debunking Public vs. Private Sector Myths
by Mariana Mazzucato
Published 1 Jan 2011

In this systems view, it is not the quantity of R&D that matters, but how it is distributed throughout an economy, often reflective of the crucial role of the State in influencing the distribution (Freeman 1995; Lundvall 1992). Schumpeterian economists criticize endogenous growth theory because of its assumption that R&D can be modelled as a lottery where a certain amount of R&D investment will create a certain probability for successful innovation. They argue that in fact innovation is an example of true Knightian uncertainty, which cannot be modelled with a normal (or any other) probability distribution that is implicit in endogenous growth theory, where R&D is often modelled using game theory (Reinganum 1984). By highlighting the strong uncertainty underlying technological innovation, as well as the very strong feedback effects that exist between innovation, growth and market structure, Schumpeterians emphasize the ‘systems’ component of technological progress and growth.4 Systems of innovation are defined as ‘the network of institutions in the public and private sectors whose activities and interactions initiate, import, modify and diffuse new technologies’ (Freeman 1995), or ‘the elements and relationships which interact in the production, diffusion and use of new, and economically useful, knowledge’ (Lundvall 1992, 2).

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When successful, often the search for one product leads to the discovery of a completely different one, in a process characterized by serendipity.1 This of course does not mean that innovation is based on luck, far from it. It is based on long-term strategies and targeted investments. But the returns from those investments are highly uncertain and thus cannot be understood through rational economic theory (as was discussed above, this is one of the critiques that modern day Schumpeterians make of ‘endogenous growth theory’, which models R&D as a game-theoretic choice). Furthermore, the ability to engage in innovation differs greatly between companies and is one of the main reasons that firms are so different from each other, and why it is nearly impossible to find firms distributed ‘normally’ around an ‘optimal-size firm’ (the ‘representative’ agent), a concept so dear to neoclassical microeconomic theory.

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‘me too’ 64–7; see also pharmaceutical companies (‘pharma’); specific drugs Duhigg, Charles 173–4 DuPont 178–9 economic crisis: boosting clean technologies 142–3; causes of 12, 182; public sector blamed for 15, 17; varied impact of in EU 41 Economist, view on State and enterprise 16 ‘ecosystems’: see innovation ecosystems electric cars/vehicles 108, 123, 124, 133 Electric Power Research Institute (EPRI) 151 Elias, John 102–3 email 104 End of Laissez Faire, The (Keynes) 4, 194 endogenous growth theory: see ‘new growth’ theory energy crisis 137, 144–5; see also green industrial revolution Energy Frontier Research Centers (EFRCs) 133 Enron 148 ‘enterprise zones’ 54 ‘entrepreneurial’ State: building of 54, 196–7; growth and inequality in 183; risk assumption and vision of 24; role of 6, 10, 21, 23; see also State Entrepreneurial State, The (report) 2, 3 entrepreneurs: DARPA’s brokering role with 77; financing of 57; investment choices of 136; myth of in Silicon Valley 63; risk types and 58–9; SBIR funding to 80, 188 EPA (Environmental Protection Agency) 150 equitable growth 13, 177, 185 European Organization for Nuclear Research (CERN) 101 ‘European Paradox’ 53 European Union: approach to green initiatives 124; ‘Big State’ behind innovation in 166; feed-in tariffs in 153; ‘fiscal compact’ of 42, 197; green transition targets in 115n2; gross R&D spending as percentage of GDP 43; growth producing spending in 196; investment in renewable energy 120, 121; public sectors in 17–18; R&D targets of 41; weaknesses of countries in 52–3 Evans, Peter 4 Evergreen Solar 151–2, 162 Evolutionary Theory of Economic Change, An (Nelson and Winter) 34–5 ‘evolutionary theory’ of production 34–5 ‘exogenous growth theory’ 34 externalities 4, 7, 21, 168; see also Apple Fadell, Tony 100n8; see also Apple Fairchild Semiconductor 76 fast Fourier transform (FDT) algorithm 109 feed-in tariffs: in energy technology 114; in European markets 153; German 122, 138, 149, 156; policy changes in 125n7; UK 124 Fert, Albert 96 Fiegerman, Seth 171n3 finance firms 182 financialization 25–8 FingerWorks 103 Finland 120n4, 121, 190 First Solar (formerly Solar Cells Inc.) 128–9, 151, 159–60; see also green industrial revolution Fiscal Investment Loan Program (Japan) 40 flat panel display (FPD) industry 106 Florida, Richard 107 Forbes on WuxiSuntech 153 ‘Fordist’ model of production in 38–9 Foxconn 170–71 France 61, 120, 120n4, 121 Freeman, Chris 193 Fuchs, Erica 133 Funding a Revolution: Government Support for Computing Research 63 G4S, security company 16 game theory 36 GDP, balance in categories of 30 Gedser turbine 145 Genentech Inc. 57, 69, 81 General Electric (GE) 125, 137, 147–8, 160–61, 174n5 general purpose technologies (GPTs) 62, 83 Genzyme 81, 181 Germany: feed-in tariffs 122, 138, 149, 156; government energy R&D spending 121; green revolution in 115n2, 116, 120, 122; long-term support provided by 158; public R&D spending in 61, 144–6; solar resources of 144; State investment bank 190; systems of innovation in 37; wind energy and R&D projects in 144–6, 149, 156 Ghosh, Shikhar 127 giant magnetoresistance (GMR) 96–7 GlaxoSmithKline 66–7, 82 Global Wind Energy Council (GWEC) 138–9 Goldwind 149 Goodenough, John B. 108 Google 20, 174–5 government energy R&D spending 121, 121 GPS (global positioning system) 105, 105n12 Great Transformation, The (Polanyi) 194–5 Greece, R&D/GDP 52 Green, Martin 152 green industrial revolution: ARPA-E 133–5; ‘carbon lock-in’ 117; China’s ‘green’ 5 year plan 122–4; climate change 117, 123, 135; development banks funding of 139–40, 139n14; DoE role in 132–3; Economist on 16; financial commitment for 116; funding of 116–19; global new investment in renewable energy 120; government energy R&D spending 121; government support to 114–15, 119, 129, 141–2; hurdles to 138, 156, 160; leaders in 11–12, 126; national approaches to 119–22; ‘No More Solyndras Act’ 130–31n12; patient capital 138–40; policies impacting 113–15, 119; pushing green development 136–7; renewable energy credits (RECs) 115n1; smart grid technology in 115, 118; sustainability 117, 119, 123; UK’s approach to 124–6; US approach to 126–35; venture capital in 127–9, 128n9; venture capital subsectors in 128; see also clean technology; solar power; wind power Green Investment Bank 125n7 Gronet, Chris 151 growth: economy-wide 62; effect of venture capital on 49; of firms and R&D benefit 44; firm size relationship to 45–6; ‘inclusive’ 167, 183, 195; inequality and 31, 54, 177; innovation as key source of 9, 177; measures of 33; myths about innovation and 10; national debt relationship to 18; ‘smart’ 167, 183; and technology 33–4; theories of 33–4; variables important for 18; see also equitable growth Grünberg, Peter 96, 97 Grunwald, Michael 113, 136 Haltiwanger, J 45 Hamilton, Alexander 73 Hanwha Group 157 hard disk drives (HDD) 96–7, 109 Harrison, Brian 154 Harrod, Roy F. 33 Haslam, Karen 171n3 Heymann, Matthias 145 Hoffman Electronics 150, 150n4 Hopkins, Matt 129n10, 160 House of Commons Energy and Climate Change Committee 125 Hsieh, Chang-Tai 46 HTTP/HTML 103–5, 109 Hughes, Alan 45 Hurst, Samuel 101 IBM 50, 97, 104, 107 ‘iGesture Numpad’ 103 Ill Fares the Land (Judt) 1 Immelt, Jeffrey 126 income-contingent loans and equity 189–90 income distribution 30n1 India 45–6, 120 industrial policy: challenges to 13; decentralized 78; in ‘rebalancing’ of economies 27; recent US history of 10, 21; redistributive tools needed in 167; State led 40; see also ‘picking winners’ inequality: as debilitating economic issue 177; growth impacted by 31; reducing 166, 186; shareholders as source of 183; tax cut impact on 54 information and communications technology (ICT) 50, 118 Information Processing Techniques Office (DARPA’s) 76 Innovalight 158 innovation: collective character of 183–7, 193; ‘culture’ of 87; as cumulative 167, 187; Death Valley stage of 47, 48, 122; development banks fostering 139–40; development of 3, 41–2; and distribution 186; economic growth driven by 9; firms resisting pressure for 77; global process of 155; government support for 31; in Japan 37–8; macro models on 44; myths about 10, 22; myths of R&D being about 44; ‘open innovation’ model of 25, 27; patent increase relationship to 50–51; process in energy technology 114; Schumpeterian innovation economics 5; State as a force in 5, 166; State leading in risky 62–4; stock market speculation and 49–50; tax policy impact on 51; threatened in US 24; undermining of in US 53, 183, 187; US 24; see also ‘systems of innovation’ approach innovation ecosystems: cumulative innovation curve in 167–8; open systems 193; socioeconomic prosperity dependence on 179; symbiotic vs. parasitic 23–5, 155, 162–3, 179; types of 2; see also actors ‘innovation fund’ 189 innovation networks 36, 40 innovation policy 22–3, 44, 46, 54, 167 Inquiry into the Nature and Causes of the Wealth of Nations, An (Smith) 1; see also ‘Invisible Hand’ Institute for Fiscal Studies (IFS) 51–2 institutional change, assessment of 36 integrated circuits 98, 98n6 Intel 130n11 intellectual property protection 110 intellectual property rights 174 International Bank for Reconstruction and Development (IBRD) 5 Internet: Apple’s use of 109; commercialization of 22; DARPA’s role in 76; and HTTP/HTML 103–5, 109; origin of 63; public funding behind 105 interventionist policy 83 investment returns, social vs. private 3–4 ‘Invisible Hand’ 30 iOS mobile operating system 89–90 iPad 102, 105, 109, 111n14 iPhone 101–3, 105–6, 109 iPlayer 16 iPod 95–6, 100–102, 105, 109, 110 Ireland 120n4, 121, 121 IRS 529 plans 111, 111n15 Italy 17, 39, 41, 52, 121 Jacobs 149 Janeway, William H. 49–50 Japan: Apple entering market of 110; computer electronics competition by 97, 98, 98n7, 106–7; economic growth of 37–8; finance system coordination by 40; flat panel display (FPD) industry of 106; government energy R&D spending 121; lithium-ion battery perfection by 108; MITI 37–8, 40; public R&D spending in 61; systems of innovation in vs.

The Elusive Quest for Growth: Economists' Adventures and Misadventures in the Tropics
by William R. Easterly
Published 1 Aug 2002

This Page Intentionally Left Blank References and Further Reading Ades, Alberto, and Rafael Di Tella. 1994. ”Competition and Corruption.” Oxford University Institute of Economics and Statistics Discussion Paper 169. Aghion, P,, and P. Howitt. 1992. “AModel of Growth Through Creative Destruction.” Econometrica 60, no. 2 (March). Aghion, P,, and P. Howitt. 1999. Endogenous Growth Theory. Cambridge, Mass.: MIT Press. Ajayi, S. Ibi. 1997. “An Analysis of External Debt and Capital Flight in the Severely Indebted Low-Income Countries.” In Z. Iqbal and R. Kanbur, eds., External Financefor Low-Income Countries. Washington, D.C.: International Monetary Fund. Alesina, Alberto. 1996.

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In Walter Little and Eduardo Posada-Carbo, eds., Political Corruption in Europe and Latin America. New York St. Martin’s Press. Hine, David. 1996. ”Political Corruptionin Italy.” In Walter Little and Eduardo Posada-Carbo, eds., PoliticalCorruption in Europe andLatin America. New York:St. Martin’s Press. Howitt, Peter. 1999. ”Steady Endogenous Growth with Population and R&D Inputs Growing.” Journal of Political Economy 107, no. 4 (August): 715-730. Hsieh, Chang-Tai. 1999. ”Productivity Growth and Factor Prices in East Asia.” American Economic Review 89, no. 2 (May): 133-138. Humana, Charles. 1992. World Human Rights Guide. 3d ed. New York Oxford University Press.

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Oxford Oxford University Press. Muhuri, Pradip, and Shea Rutstein. 1994. Comparative Studies 9: Socioeconomic, Demographic, and Health Indicatorsfor Subnational Areas. Calverton, Md.: Macro International June. Mulligan, Casey B., and Xavier Sala-i-Martin. 1993. “Transitional Dynamics in TwoSector Models of Endogenous Growth.” Quarterly Journal of Economics 108 (August): 739-773. Murphy, Kevin M,, Andrei Shleifer, and Robert W. Vishny. 1989. “Industrialization and the Big Push.” Journal of Political Economy 97, no. 5 (October): 1003-1026. Murphy, Kevin M,, Andrei Shleifer, and Robert W. Vishny. 1991. ”The Allocation of Talent: Implications for Growth.”

The Transhumanist Reader
by Max More and Natasha Vita-More
Published 4 Mar 2013

If the output levels of different sectors at time t are X(t) the amount of goods delivered to households and other final users will be (Leontief 1986): If all the outputs are reinvested into the economy Y(t) = 0 and the equation produces a dynamical system: The growth will be exponential, with a rate set by the largest eigenvalue of the bracketed matrix and a production vector X tending towards the eigenvector corresponding to the value. If the consumption Y(t) is nonzero the generic case is still exponential growth: matrix recurrences of the form X(t + 1) = CX(t) + d or differential equations like X ′ (t) = CX(t) + d have solutions ­tending towards Λeλt if C is diagonalizable. Endogenous growth models (type A,B,I) Endogenous growth theory models the growth of an economy with improving technology, where the technology is assumed to be growing as a function of the economy and allocation of resources to it. It was developed as a response to exogenous growth models, where diminishing returns predict that growth would stop rather than continue.

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Copyright © Vernor Vinge 1993. http://www-rohan.sdsu.edu/faculty/vinge/misc/singularity.html 36 An Overview of Models of Technological Singularity Anders Sandberg This essay reviews different definitions and models of technological singularity. The models range from conceptual sketches to detailed endogenous growth models, as well as attempts to fit empirical data to quantitative models. Such models are useful for examining the dynamics of the world-system and possible types of future crisis points where fundamental transitions are likely to occur. Current models suggest that, generically, even small increasing returns tend to produce radical growth.

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Assuming exogenous saving rate s and no depreciation gives This system can achieve finite time singularities even for fixed population if θ + β > 1. Past innovation and capital can create explosive growth even when each of the factors in isolation cannot. Population-technology model (type A,F,I) A population theoretic model similar to endogenous growth was formulated by Taagepera (1979). It links the population P with technology T and nonrenewable resources R via a modified logistic growth model: where the first factor represents growth rate (increased by technology towards a maximal rate k0). Technology increases as a power of population size for small populations and independent of it at large sizes: where U is a characteristic population size.

Human Frontiers: The Future of Big Ideas in an Age of Small Thinking
by Michael Bhaskar
Published 2 Nov 2021

If you judge research output by verbiage, you don't find a problem; if you judge it by the rate at which ideas find purchase, you do. The same analysis could be given regarding transport, for example: it would likely exhibit a strongly rising curve of R&D spend, not matched by increases in travel speed or comfort. If Romer's work on endogenous growth theory was vital in bringing ideas into economics, Jones and his colleagues show how ideas are not as ceaselessly abundant in new varieties as we might expect. As the authors say, ‘research productivity is falling everywhere we look.’ 50 It seems the frontier has become sticky. This indicates a deeper trend undergirding the breakthrough problem.

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Simonton, Dean, Sussex: Wiley Jones, Charles I. (1995), ‘R & D-Based Models of Economic Growth’, Journal of Political Economy, Vol. 103 No. 4, pp. 759–84 Jones, Charles I. (2002), ‘Sources of U.S. Economic Growth in a World of Ideas’, American Economic Review, Vol. 92 No. 1, pp. 220–39 Jones, Charles I. (2019), ‘Paul Romer: Ideas, Nonrivalry, and Endogenous Growth’, The Scandinavian Journal of Economics, Vol. 121 No. 3, pp. 859–83 Jones, Charles I., and Vollrath, Dietrich (2013), Introduction to Economic Growth: Third Edition, New York: W.W. Norton Joyner, Michael J., Paneth, Nigel, and Ioannidis, John P.A. (2016), ‘What Happens When Underperforming Big Ideas in Research Become Entrenched?’

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, available at SSRN: https://ssrn.com/abstract=3698698 Knott, Anne Marie (2017), How Innovation Really Works: Using the Trillion-Dollar R&D Fix to Drive Growth, New York: McGraw-Hill Koestler, Arthur (1964), The Sleepwalkers: A History of Man's Changing Vision of the Universe, London: Penguin Koestler, Arthur (1970), The Act of Creation, London: Pan Piper Kounios, John, and Mark Beeman (2015), The Eureka Factor: Creative Insights and the Brain, London: Windmill Kremer, Michael (1993), ‘Population Growth and Technological Change: One Million B.C. to 1990’, The Quarterly Journal of Economics, Vol. 108 No. 3, pp. 681–716 Kuhn, Thomas S. (2012), The Structure of Scientific Revolutions (fourth edition), Chicago: University of Chicago Press Lafond, François, and Kim, Daniel (2017), ‘Long-Run Dynamics of the U.S. Patent Classification System’, available at SSRN: https://ssrn.com/abstract=2924387 Laincz, C.A. and Peretto, P.F. (2006), ‘Scale effects in endogenous growth theory: an error of aggregation not specification’, Journal of Economic Growth, 11, pp. 263–88 Lakatos, Imre (1980), The Methodology of Scientific Research Programmes: Philosophical Papers Volume 1, Cambridge: Cambridge University Press Landhuis, E. (2016), ‘Scientific literature: Information overload’, Nature 535, pp. 457–8 Le Fanu, James (2010), ‘Science's dead end’, Prospect, accessed 26 August 2019, available at https://www.prospectmagazine.co.uk/magazine/sciences-dead-end Le Fanu, James (2011), The Rise and Fall of Modern Medicine, London: Abacus Le Fanu, James (2018), Too Many Pills: How Too Much Medicine is Endangering our Health and What We Can Do about It, London: Little, Brown Lehrer, Jonah (2012), Imagine: How Creativity Works, New York: Houghton Mifflin Harcourt Lem, Stanisław (1974), The Futurological Congress, London: Penguin Modern Classics Lenton, Tim et al. (2019), ‘Climate tipping points – too risky to bet against’, Nature, accessed 5 January 2020, available at https://www.nature.com/articles/d41586-019-03595-0 Lingfei Wu, Dashun, Wang, and Evans, James A. (2019), ‘Large teams develop and small teams disrupt science and technology’, Nature, 566, pp. 378–82 Lloyd, Seth (2001), ‘Computational capacity of the universe’, CERN, accessed 12 January 2021, available at http://cds.cern.ch/record/524220/files/0110141.pdf Loeb, Avi (2021), Extraterrestrial: The First Sign of Intelligent Life Beyond Earth, London: John Murray Lovejoy, Arthur O. (1976), The Great Chain of Being: A Study of the History of An Idea, Cambridge, MA: Harvard University Press Lovelock, James (2014), A Rough Ride to the Future, London: Allen Lane Lovelock, James (2019), Novacene: The Coming Age of Hyperintelligence, London: Allen Lane Lucking, Brian, Bloom, Nicholas, and Van Reenen, John (2018), ‘Have R&D Spillovers Changed?’

Hawai'I Becalmed: Economic Lessons of the 1990s
by Christopher Grandy
Published 30 Sep 2002

Anthony Lawrence Clapes has argued that Hawai‘i has not done nearly enough to attract high tech. See Anthony Lawrence Clapes, Blue Wave Millennium: A Future for Hawai‘i. (Honolulu: Dark Matter Press, 2000). Paul Romer and Robert Lucas are among the leading writers in this area. See Paul Romer, “The Origins of Endogenous Growth,” Journal of Economic Perspectives 8:1(1994): 3–22; and Robert E. Lucas, Jr., “On the Mechanics of Economic Development,” Journal of Monetary Economics 22(1988): 3–42. See Robert E. Hall. and Charles I. Jones, “Levels of Economic Activity Across Countries,” American Economic Review, Papers and Proceedings 87:2(1997): 173–177; Robert E.

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“It’s My Job: Even in a Bad Economy Laying Off Workers Is Difficult.” Honolulu Star-Bulletin, 13 October 1998. ———“HEI Exec Often Absent for Revenues Council.” Honolulu Star-Bulletin, 30 May 2001. Pratt, Richard C. Hawai‘i Politics and Government. With Zachary Smith. Lincoln: University of Nebraska Press, 2000. Romer, Paul. “The Origins of Endogenous Growth.” Journal of Economic Perspectives 8(1)(1994): 3–22. Roth, Randall W., ed. The Price of Paradise: Lucky We Live Hawai‘i? Honolulu: Mutual Publishing, 1992. ———The Price of Paradise, Volume II. Honolulu: Mutual Publishing, 1993. References
125 State of Hawai‘i, Department of Budget and Finance.

GDP: A Brief but Affectionate History
by Diane Coyle
Published 23 Feb 2014

UNDERSTANDING GROWTH Even so, as more and more countries’ GDP statistics became available, the theories of growth were refined from the Solow model, which placed so much weight on the important but unexplained role of technology. A new generation of growth models developed from the 1980s onward were able to start explaining how “technology” happened, rather than treating it as a mysterious “black box.” In these “endogenous growth” theories, technological progress fed into GDP growth in a virtuous circle, because faster growth enabled more investment and innovation. “Technology” takes the form of ideas in people’s minds, or education and skills, or ideas embodied in equipment and products. Looking explicitly at the importance of variables measuring education levels and levels of innovation such as patenting in business confirmed their role in explaining the difference in growth rates among different countries.

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See well-being and welfare economy: centrally planned, 46–47, 56, 60, 66–68; complexity of, 122–25; expansion of (1991–2007), 82–84; private and government roles in, 14–17, 20–21; twenty-first-century meaning of, 139–40 education, access to, 61, 74 Ehrlich, Paul, 69–70 Elstat, 1–2 emerging markets, 94 endogenous growth theories, 79 England. See United Kingdom environmentalism, 60, 68–71, 115–16, 133–34 European Commission, 2–4 European Union (EU), 1 Eurozone, 101 exchange rates, 48–49. See also purchasing power parity expenditures: categories of, 27–28; as GDP measure, 25, 26t, 27 factor cost, 30 famines, 73 Federal Reserve Bank of Dallas, 121, 123–25 Federal Reserve Board, 83, 88, 94 financial crisis (2008–), 93–97 financial intermediation services indirectly measured (FISIM), 100–104, 136 financial sector, 40, 97–105 fiscal policy, 15, 19, 23, 77 fiscal stimulus, 23 FISIM.

Fully Grown: Why a Stagnant Economy Is a Sign of Success
by Dietrich Vollrath
Published 6 Jan 2020

I calculated the percentages using the reported numbers of firms in a given bin divided by the reported total number of firms. 11. The Necessity of Market Power The two papers referenced as laying the groundwork for endogenous growth theory are Romer (1986, 1990). They built on the basic structure of the Solow (1956) model. Both of Romer’s papers based growth on the idea of an expansion in the variety of goods produced. The origin of Schumpeterian endogenous growth theory, in which firms compete to replace one another in providing a given product, can be traced back to Aghion and Howitt (1992). For a paper that contains elements of both kinds of growth theory, see Grossman and Helpman (1991).

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Working Paper No. 25382, National Bureau of Economic Research, Cambridge, MA. Hsieh, C.-T., and E. Moretti. Forthcoming. “Housing Constraints and Spatial Misallocation.” American Economic Journal: Macroeconomics. Jones, C. I. 1995a. “R&D-Based Models of Economics Growth.” Journal of Political Economy 103: 759–84. Jones, C. I. 1995b. “Time Series Test of Endogenous Growth Models.” Quarterly Journal of Economics 110: 495–525. Jones, C. I. 2016. “Life and Growth.” Journal of Political Economy 124 (2): 539–78. Jones, L. E., and M. Tertilt. 2008. “An Economic History of Fertility in the United States: 1826–1960.” In Frontiers of Family Economics, edited by P. Rupert, 1:165–230.

The Great Economists Ten Economists whose thinking changed the way we live-FT Publishing International (2014)
by Phil Thornton
Published 7 May 2014

This concept of human capital clearly has tremendous implications for why the distribution of income is skewed in the way that it is (so that there is inequality within the workforce), the distribution of incomes between different age groups, and the patterns of unemployment among unskilled compared with skilled people. More recently his ideas have fed into a new way of looking at growth that properly accounts for human capital – what Nobel laureate Robert Lucas called ‘endogenous’ growth. Chapter 9 • Gary Becker203 New home economics One of Becker’s radical pieces of research was to apply an economic interpretation of decision making to how families made decisions. We saw (in Chapter 8) how Paul Samuelson said that families should be seen as units where members cooperate to maximise their overall utility.

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Index A Theory of Moral Sentiments (Smith, 1759) 2, 5–6 Adelman, Irma 110 American Economic Association 170 An Inquiry into the Nature and Causes of the Wealth of Nations see The Wealth of Nations anarchism 156 apartheid system in South Africa 199 Ariely, Dan 234 Arrow, Kenneth 191, 213 AT&T 22 austerity versus stimulus debate 43–4, 140–1 Austrian School of Economics 121–2 autarky concept 184 bank bailouts in the financial crisis 162 Bank of England 161 Barro, Robert 43 Barro-Ricardo equivalence 43–4 Becker, Gary (1930– ) 193–216 approach to human behaviour 212–15 building human capital 200–2, 210 early life and influences 195–7 economic perspective on discrimination 196–7, 198–9 Economics of Discrimination (1957) 196–7, 198–9 economics of the family 213–15 family decision making 203–6 key economic theories and writings 197–212 long-term impact 212–15 new home economics 203–6 Nobel Prize (1992) 194, 195–6 on crime and punishment 207–10 on drug addiction 210–12, 215 rational choice model 197, 212– 15, 216 verdict 215–16 Becker–Posner Blog 215 behavioural economics 218–19, 233–6 Bentham, Jeremy 31, 181 Bergmann, Barbara 206 Bergson, Abram 182 Bergson–Samuelson social welfare function 182–3 Bernanke, Ben 77, 159, 162 Bernoulli, Daniel 229 bias in decision making 222–5 in financial decision making 225–32 Bitcoin currency 138 Black, Fischer 187 Blinder, Alan 215 Bloomsbury Group 94 Blunt, Anthony 94 boom and bust cycles see business cycles Bretton Woods agreement 95, 108–9 Brown, Gordon 3, 42 Burgess, Guy 94 Burns, Arthur F. 147 Bush, George H.W. 139 business cycles 57, 65 Hayek’s explanation 123–6 Samuelson’s oscillator model 174–5 Butler, Eamonn 162 Cambridge School of economics 74, 86 Cambridge spy ring 94 capital flow controls 113 capital-intensive goods, effects of increase in wages 33 capitalism exploitation of the working class (Marx) 56–8, 62–3 Index239 ‘fictitious capital’ concept (Marx) 62 seeds of its own downfall (Marx) 56–8, 61–3 capitalist production process (Marx) 54–6 Carlyle, Thomas 33 cartels evil of 10–11 regulation to prevent 21–2 central banks control of economic activity 161 over-expansion of credit 123–4 central state planning, Hayek’s opposition to 134–6, 140 certainty effect 229, 230 ceteris paribus approach to economic analysis 79–80 Chapman, Bruce 19 Chicago School of economic thought 146, 160, 194 China savings and investment imbalance with the US 113 trade imbalance with the US 45 choice architecture 234 Churchill, Winston 98 classical economics 40, 54 Coase, Ronald 73 cognitive biases (Kahneman) 222–5 communism 19, 50 Communist Manifesto (Marx and Engels) 52, 58–61 company bailouts in the financial crisis 162 comparative advantage 35–8, 183–4 complex adaptive systems, science of 138 complex financial products 61–2, 187 computer-games-based money 138 confirmation bias 227 consumer demand marginal rate of substitution 180 revealed preference theory 180–1 consumption smoothing concept 149, 163 Corn Laws, attack by Ricardo 33–5 costs of production, relationship to value 75–7 credit expansion, as a driver of boom and bust cycles 123–4 crime and punishment, views of Becker 207–10 Darling, Alistair 112 Das Kapital (Marx) 52, 53–4, 59–61, 62, 67–8 decision making biases and errors in financial decisions 225–32 heuristics and bias in 222–5 Prospect Theory (Kahneman) 228–32, 234 under risk 228–32 demand side economics 127 depression Keynesian interventionist view 92–3, 94, 105–6 see also Great Depression (1930s) dialectic style of analysis 52, 54 Diamond, Peter 179 diminishing marginal utility 82 discrimination economic perspective of Becker 196–7, 198–9 views of Friedman 157 distribution of economic value (Marx) 54–6 division of labour and productivity 11–14 car production 20–1 in daily life 20–1 divorce rates 205 drug addiction, views of Becker 210–12, 215 Dubner, Stephen 234 Eastern Europe, influence of Hayek 140 Ebenstein, Larry 158 Economics: An Introductory Analysis (Samuelson, 1948) 168, 171–3, 188–9 Economics of Discrimination (Becker, 1957) 196–7, 198–9 Efficient Market theory 111, 112, 187 240Index elasticity of demand 82–4 Elizabeth II, Queen 158 emerging markets, offshoring of jobs to 41 endogenous growth 202 endowment effect 232, 234 Engels, Friedrich 52, 58–61 ethical judgements in economics 182–3 European Central Bank 161 exchange rates, impact of trade on 185–6 expected utility theory (EUT) 228, 229–30, 232 externalities 85 factor price equalisation theorem 186–7 Fama, Eugene 160, 187 family decision making economic perspective 183, 203–6, 213–15 welfare decision making 183 fiat currency 152 ‘fictitious capital’ concept (Marx) 62 financial decision making, biases and errors in 225–32 financial economics, work of Samuelson 187 First World War 95 Folbre, Nancy 206 Ford Model-T car, assembly-line production system 21 Foundations of Economic Analysis (Samuelson, 1947) 168, 169–70 Fox, Charles James 23 Freakonomics (Levitt and Dubner) 234 free-market mechanism of supply and demand 8–9 free market system view of Adam Smith 13–14, 16–18 view of Hayek 131–3 view of Friedman 155–7 free rider problem in public goods 177–8 Free to Choose (Friedman and Friedman, 1980) 158 free trade, influence of Adam Smith 22–3 Freeman, Richard 201 frictional unemployment 155 Friedman, David 156 Friedman, Milton (1912–2006) 94, 110, 145–64, 190–1, 196 advocate of the free market 155–7 belief in individualism 155–7 criticism of Keynesianism 149–50 early life and influences 147–8 economics in action 160–3 fiat currency 152 Free to Choose (1980 ) 158 influence of the Great Depression (1930s) 148 influence on modern economic theory 158–60 limited role of government in the economy 152, 155–7 long-term legacy 157–63 monetarism 151–2 monetarist rule 152 monetary policy 151–2 ‘natural’ rate of unemployment 153–5 new explanation for the Great Depression 150–1 Nobel Prize in economics (1976) 146, 147–8, 154, 161 non-accelerating inflation of unemployment (NAIRU) 153–5 permanent income hypothesis 148–50 role of money supply in the economy 151–2 verdict 163–4 Friedman, Rose (formerly Rose Director) 147, 148, 157, 158, 160 FTSE-listed plcs 86 Funk, Walter 108 Funk Plan 108 Galbraith, J.K. 159 gambler’s fallacy (misconception of chance) 224 General Agreement on Tariffs and Trade (GATT) 40 Index241 general equilibrium theory 8 genetically modified foods 42 geographical effects in economics 84–6 Giffen goods 84 global financial crisis (2007–8) 92, 174 and Keynesianism 111–13 global stimulus package 113 Marxist view 61–3 global free trade influence of Adam Smith 22–3 influence of Ricardo 40–2 global public goods 177–8 global recession (2009) see Great Recession (2009) gold standard, criticism by Keynes 95, 98, 107 government debt and the Great Recession (2009) 43 taxpayer view of (Ricardo) 38–9 government role in the economy anti-central planning view of Hayek 134–6, 140 Keynesian view 92–3, 94, 105–6 view of Adam Smith 9, 10, 16–18 view of Friedman 152, 155–7 Great Crash (1929) 98, 99 Great Depression (1930s) 19, 22–3, 85, 92 explanation of Friedman and Schwartz 150–1 influence on Friedman 148 influence on Keynes 99–100 role of the Federal Reserve 159 Great Recession (2009) 23 and government debt 43 arguments against protectionism 42 austerity versus stimulus debate 43–4, 140–1 Greece, sovereign debt crisis 113–14 Greenspan, Alan 111–12, 235 Grossman, Michael 212 Hansen, Lars Peter 160 Hayek, Friedrich (1899–1992) 110, 111, 119–42 business cycle theory 123–6 clash with Keynes 120, 126–31 collapse of the Soviet Union 140 early life and influences 120 emphasis on individual freedom 134–6, 140 explanation for boom and bust cycles 123–6 First World War 121 focus on supply side economics 127 influence in Eastern Europe 140 influence on George H.W.

Exceptional People: How Migration Shaped Our World and Will Define Our Future
by Ian Goldin , Geoffrey Cameron and Meera Balarajan
Published 20 Dec 2010

The momentum of globalization, however, is reinforcing the efforts of large companies to acquire exceptions to immigration restrictions. As one commentator writes: “Immigration policy today is driven by businesses that need more workers—skilled and unskilled, legal and illegal.”101 The lobbying efforts of large companies, supported by a growing body of research on innovation and endogenous growth, have prompted a widespread shift in thinking among developed country governments about the desirability of skilled migration. Most developed countries have implemented or are implementing channels to attract university-educated migrants, enabling their companies to participate in the “international competition for talent.”102 The European Commission has announced that it will need 20 million skilled migrants by 2020 and has issued a directive for the creation of a “blue card” that would allow the EU to compete for talent with the United States, Australia, and Canada.

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“If we don't get some good, talented, capable people here, we're in trouble.”114 Philadelphia also started a similar campaign and brought in more than 100,000 new migrants between 2000 and 2006.115 Their campaign to boost the regional economy by attracting skilled international migrants featured new coalitions between civic leaders, migrant groups, chambers of commerce, and city halls. In the foreseeable future, the management of migration at a national level should involve progressively lowering barriers to skilled migration. Research on innovation, entrepreneurship, and endogenous growth highlights the potential benefits of increasing a country's volume and diversity of human capital. Restrictive immigration policies have been shown to have a direct impact on the rates of innovation in the United States (and presumably other countries as well).116 Developed countries that maintain obstacles to skilled migration will lose out to emerging economies as they become more open to mobility.

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Furthermore, even with the availability of information over the Internet and satellite networks, without people crossing borders, the dynamic processes of fertilization, invention, and imitation would simply atrophy. Preventing migration would lead to economies becoming anemic through the social and cultural isolation brought on by closed borders. In the short term, it would lead to social and economic disruption, and in the long term, to the weakening of endogenous growth. To imagine how closed borders lead to economic stagnation and cultural ossification, we have only to look at the twentieth-century examples of post-Revolutionary Cuba or North Korea (other examples include the Soviet Union, which was the most significant attempt to prevent emigration in the twentieth century, as well as apartheid South Africa and the Israeli isolation of the Palestinian Territories).8 In these cases, however, even strong and repressive states have been unable to fully enforce closed borders.

The Haves and the Have-Nots: A Brief and Idiosyncratic History of Global Inequality
by Branko Milanovic
Published 15 Dec 2010

Taylor, and Jeffrey G. Williamson (Chicago: University of Chicago Press, 2003), 121-187, quoted in Niall Ferguson and Moritz Schularick, “The Empire Effect: The Determinants of Country Risk in the First Age of Globalization, 1880-1913,” Journal of Economic History (June 2006): 285. 8 Paul Romer, “The Origins of Endogenous Growth,” Journal of Economic Perspectives 8, no. 1 (1994): 3-22. 9 Paul Romer, “Are Non-convexities Important for Understanding Growth?” American Economic Review [Papers and Proceedings of the American Economic Association] 80, no. 2 (1990): 97-103. Vignette 2.1 1 See Peter H. Lindert and Jeffrey G.

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[Do not think of convergence among the small subset of rich countries when the world is diverging!] Quah, Danny. “Empirics for Economic Growth and Convergence: Stratification and Convergence Clubs.” European Economic Review 40 (1996): 427-443. [First formulation of “twin peaks”—a rich and a poor peak—of international income distribution.] Romer, Paul. “The Origins of Endogenous Growth.” Journal of Economic Perspectives 8, no. 1 (1994): 3-22. [Explains how the new approach to growth evolved in response to real-world departures from mainstream neoclassical theory.] Vignette 2.1 Bairoch, Paul. Economics and World History: Myths and Paradoxes. Chicago: University of Chicago Press, 1993. ———.

The Captured Economy: How the Powerful Enrich Themselves, Slow Down Growth, and Increase Inequality
by Brink Lindsey
Published 12 Oct 2017

To understand why, we need to understand exactly how rent-creating policies undermine growth and exaggerate inequality, and how those harmful consequences interact with deeper factors now shaping the pace and distribution of economic growth. III STIFLING GROWTH Modern growth theory, beginning with the pioneering work of Robert Solow and continuing with more recent “endogenous growth” models, makes clear that the ultimate source of economic growth is innovation: the development of new products and production methods that increase the level of output per given unit of capital and labor inputs.15 Of course, the mere introduction of new products and methods is only the first step; innovation’s full effect comes as the new products and methods diffuse throughout the economy.

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See also software industry copyright/patent law and, 75–79, 125, 159 dotcom bubble and, 46–47 intellectual property and, 70–71 open-source software and, 71 profits and, 19 sales and, 20 startup rate and, 22 Digital Millennium Copyright Act of 1998, 66, 78 distressed areas, 3 DMCA (Digital Millennium Copyright Act) of 1998, 66, 78 Dodd-Frank Act, 57, 135–36 dotcom bubble, 46–47 downstream innovation, 74 downward redistribution, 28 Drutman, Lee, 132, 138, 161 dynamism, 5–7, 16–25, 96, 127, 141 Easterly, William, 61 economic downturns in asset value, 49 morality and, 2–3 economic growth, 2–3, 181n3 conditions for, 26–28 creative destruction and, 13, 24–25 endogenous, 24 entry barriers and, 25–26 financialization and, 37–38, 61–63, 142, 146, 159 interference with, 24–28, 186n15 regulatory capture and, 17 rent-seeking and, 113–23 restrictions on building and, 123 total factor productivity and, 24–27 zoning and, 113–23 economies of agglomeration, 114, 118 economies of scale, 21, 82, 114 Economist, The, 119 education, 3, 30 copyright/patent law and, 77–78 financial sector and, 62 geographic mobility and, 117–19, 122 occupational licensing and, 93–95, 104, 107 post-New Deal, 30 school reform movement and, 157–58, 208n13 skilled workforce and, 15 efficiency, 15 “big tradeoff” and, 4–5 concentration of industry and, 20 Eliot, T. S., 196n33 End of Liberalism, The (Lowi), 183n18 endogenous growth, 24 entertainment industry, 65, 67, 69, 75–77, 81–84, 125, 144 entrepreneurship, 6, 21–22, 26 entry barriers, 185n11 concentration of industry and, 21 copyright/patent law and, 79–80 growth rate and, 25–26 net entry and, 2 occupational licensing and, 95–97 post-New Deal, 29 rent-seeking and, 21–22 startup rates and, 22 “Tobin’s Q” and, 20 environmentalism, 156–57 equity, 4–5, 47, 49–58, 63 ethanol, 34 European Union Court of Justice, 76 Export-Import Bank, 34 extremism, 2–3 Fannie Mae (Federal National Mortgage Association), 39–40, 45, 53 Faricy, Christopher, 207n35 “fast track” consideration, 170 Faust (Goethe), 196n33 Federal Home Loan Bank Board, 39 Federal Home Loan Mortgage Corporation (Freddie Mac), 40–41, 45, 53 Federal Housing Administration, 39, 41 Federal Housing Enterprise and Soundness Act of 1992 (GSE Act), 41 Federalist Paper No. 10 (Madison), 17 Federalist Paper No. 51 (Madison), 9 Federal National Mortgage Association (Fannie Mae), 39–41, 45, 53 Federal Register, 23 Federal Reserve Bank of Dallas, 35 Federal Reserve System, 35, 52, 56 Federal Trade Commission, 165–66 FHA.

The Economics Anti-Textbook: A Critical Thinker's Guide to Microeconomics
by Rod Hill and Anthony Myatt
Published 15 Mar 2010

Investing in housing, nutrition, health and education and redistributing income to families with children, especially to underprivileged families, pays off by avoiding future costs and increasing future productivity (Myrdal 1973: 40–41). By the late 1980s, this view was reflected in the ‘new growth theory’. Many of these ideas about ‘endogenous growth’ stress the importance of human capital (as reflected in education and skills), and the importance for growth of the ‘intergenerational transmission of human capital’ – a fancy way of saying that children’s prospects are importantly influenced by their parents’ socio-economic situation.12 Those models that examine explicitly the effects of inequality on growth predict that lower inequality should be associated with higher longterm growth (Osberg 1995).

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Looking at the experience of about twenty OECD countries between the early 1960s and the mid-1990s, he found no significant effect of social transfers on economic growth (Lindert 2004b: vol. 2, ch. 18). 211 9  |  Government, taxation most prosperous countries and its people among the happiest. How can a place like Denmark exist if there is a serious trade-off between efficiency and equity? While a lot can be learned from the experience of places like Denmark or Gunnar Myrdal’s Sweden, economists also like to consider the combined experience of many countries. The endogenous growth theories were developed at the same time as enough data had accumulated to make statistical examination of a large sample of countries possible (Lindert 2004a). Studies examined the growth–inequality relationship looking at groups of countries, while taking into account the many other factors that economic theory suggests will also influence growth (Persson and Tabellini 1994; Alesina and Rodrik 1994; Barro 2000).

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If it is ‘offshored’ it takes place in another country, whether in the same company or not. 7 The figure is adapted from Figure 1 in Palley (2006: 11). 8 It also does not consider that people may view differently their responsibility for acts of commission (e.g. sending their toxic waste to places where it won’t be disposed of properly) and acts of omission (e.g. failing to act to address global economic injustice). 9 The outcome would be acceptable only if the initial distribution of income and wealth in the world were acceptable. 10 The Basel Action Network works to promote adherence to the Basel 271 Notes ing out that one Pareto optimal position would be for one person to have all the world’s income and everyone else nothing. 11 The policy change is a reduction in a guaranteed minimum annual income and a reduction in the tax rate on labour income. 12 Endogenous growth means that the growth rate is generated within the theoretical model itself rather than being determined outside it, i.e. exogenously. For example, the neoclassical theory of economic growth fashionable in the 1960s and 1970s featured exogenous technological change, driven by some scientific progress that lay outside the model. 13 The ‘no free lunch’ idea also does not survive a course in macroeconomics: in situations of mass unemployment of resources, when the economy is far below its production possibility frontier, appropriate macroeconomic policy can expand the production of all goods by putting unemployed resources to work.

The Great Stagnation
by Tyler Cowen
Published 24 Jan 2011

Economic Growth in a World of Ideas,” American Economic Review, March 2002, 92, 1, 220-239. The innovation graph is reproduced from Jonathan Huebner, “A possible declining trend for worldwide innovation,” Technological Forecasting & Social Change, 2005, 72, p. 982. On the rate of patenting and related issues, see Paul S. Segerstrom, “Endogenous Growth Without Scale Effects,” American Economic Review, December 1998, 88, 5, 1290-1310; and also Samuel S. Kortum, “Research, Patenting, and Technological Change,” Econometrica, November 1997, 65, 6, 1389-1419. On how finance has driven a lot of the rise in top incomes, see Steven Kaplan and Joshua Rauh, “Wall Street and Main Street: What Contributes to the Rise in the Highest Incomes?”

Capitalism Without Capital: The Rise of the Intangible Economy
by Jonathan Haskel and Stian Westlake
Published 7 Nov 2017

David Warsh’s fascinating book Knowledge and the Wealth of Nations tells the story of how the economist Paul Romer developed an improved theory of economic growth that included knowledge, in particular R&D, rather than treating it as an unpredictable exogenous variable. The work of Romer, Chad Jones, Philippe Aghion, and other pioneers of endogenous growth theory, as it’s called, pointed out that knowledge is an unusual type of good because putting an idea into practice doesn’t use it up. They used the term “non-rivalry” to contrast a “knowledge good,” like an idea, that can be used by many, with a “rival good,” like a sandwich, which can only be used by one person.

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INDEX accounting, treatment of intangibles in, 202–4 advertising spending, 50 Aghion, Phillipe, 41, 62, 173 AirBnB, 24, 51; contestedness and, 115; legal travails of, 187; scalability of, 67; and synergies, 82 Akzo Nobel, 167 Allen, Robert, 83 Amana, 80, 85, 183 Amazon, 111, 191, 194–95, 197 American Airlines, 49 Andreessen, Marc, 23 Andrews, Dan, 96 Angry Birds, 65 Ansari-X Prize, 85 Anslow, Louis, 127 Appert jar, 64 Apple, 23–24, 51, 87, 104; and spillovers, 72–73, 110; and synergies, 86 applied knowledge, 65 Arrow, Kenneth, 62, 147 Arthur, Brian, 62, 80 assets, definition of, 19–21 Atkinson, Anthony, 118 Atlas, Charles, 18 authority, of managers, 189 automated bank teller machines, 127 Autor, David, 123 Awano, Gaganan, 56 banking, 158–59, 162–66 Barth, Mary, 204 basic knowledge, 65 Baumol, William, 28 Baumol’s Cost Disease, 28 Beatles, the, 59, 61, 240 Bell, Daniel, 4 Beniger, James, 30 Berliner, Joseph S., 195 Bernstein, Shai, 171, 172 Bessen, James, 114–15, 127 Black Cap pub, 150 Blaug, Mark, 54 blocking patents, 113–14 Bloom, Nicholas, 82, 129, 195 Bodypump®, 17–18, 21 Bonnet, Odran, 128 Bono, Pierre-Henri, 128 Boulevard of Broken Dreams, The (Lerner), 178, 220 Braggion, Fabio, 132–33, 134 branding, 49, 76 Brexit, 122, 141–42, 143 British Airports Authority (BAA), 1–2 British Airways, 49 British Coachways, 162 Brooker, Charles, 183 Brynjolfsson, Erik, 30, 82, 123 Buffet, Warren, 19 Bureau of Economic Analysis (BEA), 39–41, 244n3 Burroughs, Edgar Rice, 76 Bush, Vannevar, 232 business climate, changes in, 31–34 Callaghan, James, 127 capital, 10; definition of, 19–21; human, 54, 119; social, 156, 236 Capital (Marx), 126 Capital in the Twenty-First Century (Piketty), 19, 121, 128, 136 capitalism, 158, 243n3 capitalization, versus expensing, 202–4 Chapelle, Guillaume, 128 Chen, Ester, 204 Chesbrough, Henry, 83 Citibank, 40 Clayton, Tony, 42 clusters, 147–48, 235–36 Coase, Ronald, 190–91, 192 Coca Cola Company, 9–10, 49 code of laws, of Ur-Nammu, 75 codified knowledge, 65 Collecchia, Alessandra, 40 collective intelligence, 217 ComCab, 82 competitive advantage, 185–87 computerized information, 43–45 Conference on Research in Income and Wealth, 4, 42 contestedness, 87–88, 115, 132; venture capital and, 177 Cook, Tim, 51 copyright, 76–79, 165, 213 Corbyn, Jeremy, 223 Corrado, Carol, 4, 5, 42, 43, 45 cost of intangible investment, 28 Cowen, Tyler, 93, 228 Coyle, Diane, 4, 36 “creative class,” the, 215 Criscuolo, Chiara, 96 crowdfunding, 166 CT scanners, 59–61, 104, 204 cult of the manager, 184 Curtiss Aeroplane and Motor Company, 79 DARPA, 218, 226–27, 232 data, 63 David, Paul, 151–52 Davies, Richard, 168 de Soto, Hernando, 153 Digital Copyright Exchange, 213 Digital Millennium Copyright Act, 76 Dillow, Chris, 110, 136, 188 disbenefits, 79 Disney, 78–79, 209 diversified investors, 205 Dodgson, Mark, 197 Doerr, John, 176 Domesday Book, 2–3 dot-com bubble, 4, 42, 145–46 Downing, Kate, 148 DunnHumby, 23 economic competencies, 43–45 economies of scale, 185 Edgerton, David, 146 Edmans, Alex, 170, 171, 172–73 education and training, 51–52, 170, 228–30 Einstein, Albert, 127 e-mail, 217 EMIDEC computer, 59 EMI Records, 59–61, 104, 204 employment strictness, 32 End of Accounting, The (Lev and Gu), 201, 220 endogenous growth theory, 62 Engelbart, Douglas, 217 Enron, 42 Entrepreneurial State, The (Mazzucato), 232 EpiPen, 85–86, 112, 239 Ericsson, 104 esteem, inequality of, 122–23, 141–42; intangibles’ effects on, 129–40 expensing, versus capitalization, 202–4 Facebook, 34, 67, 170, 175, 217, 222 Fang, Vivian W., 171 fast followership, 110 Federal Reserve.

Straight Talk on Trade: Ideas for a Sane World Economy
by Dani Rodrik
Published 8 Oct 2017

Innovation occurs, in large part, as a result of serendipity, as fundamental scientific discoveries yield unanticipated practical benefits or as experimentation and trial and error result in new products and processes. Similarly, we must presume there is a strong idiosyncratic element in political leadership and political creativity. Nevertheless, as the economic literature on research and development and endogenous growth indicates, certain systematic elements are also in play.12 For example, technological innovation responds to market incentives—the pursuit of monopoly profits through the acquisition of temporary advantages over competitors. Likewise, policy ideas that relax political constraints can be thought of as the consequence of both idiosyncratic processes and purposive behavior.

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Michael Walzer, “The Problem of Dirty Hands,” Philosophy & Public Affairs, vol. 2(2), Winter 1973: 174. 12. Paul S. Segerstrom, T. C. A. Anant, and Elias Dinopoulos, “A Schumpeterian Model of the Product Life,” American Economic Review, vol. 80(5), December 1990: 1077–1091; Philippe Aghion and Peter Howitt, Endogenous Growth Theory, MIT Press, Cambridge, MA, 1998. 13. Daron Acemoglu and James A. Robinson, “Economics versus Politics: Pitfalls of Policy Advice,” NBER Working Paper 18921, March 2013. 14. Leighton and López, Madmen. 15. Leighton and López, Madmen: 134. 16. Leighton and López, Madmen: 178. 17. Jesper B.Sørensen and Toby E.

The Warhol Economy
by Elizabeth Currid-Halkett
Published 15 Jan 2020

Contrast that with Silicon Valley, which fostered a more cooperative, interdependent environment where much of the work was done through decentralized networks of production among lots of smaller firms—a perfect example of Piore and Sabel’s flexible specialization. The Valley’s decentralized, cooperative environment helped spawn more innovation and encouraged firms to use the same information and resources in different ways. Much of this dynamic is formalized in what the economist Paul Romer has called “endogenous growth,” the ability for wealth, production, and divisions of labor to come from within a particular place without external inputs.7 Unlike a piece of equipment that becomes less productive over time, as it requires maintenance, isn’t compatible with new technology, or ceases to produce products that consumers want, knowledge exhibits increasing returns.

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The Debutante’s Ball. New York Times, Arts & Leisure, December 3. Romer, Paul. (1986). Increasing Returns and Long-Run Growth. Journal of Political Economy (October): 1002–37. ———. (1990). Endogenous Technological Change. Journal of Political Economy 98, 5: S71–S102. ———. (1994). The Origins of Endogenous Growth. Journal of Economic Perspectives 8, 1: 3–22. Rosenberg, David. (2002). Cloning Silicon Valley: The Next Generation High-Tech Hotspots. London: Reuters. Rozhon, Tracie. (2005). The Rap on Puffy’s Empire. New York Times, July 24. Santagata, Walter. (2004). “Creativity, Fashion and Market Behavior.”

Scale: The Universal Laws of Growth, Innovation, Sustainability, and the Pace of Life in Organisms, Cities, Economies, and Companies
by Geoffrey West
Published 15 May 2017

In fact, Simon argued in his 1981 book The Ultimate Resource that a larger population is actually better because it stimulates even more technological innovation, inventiveness, and ingenuity, thereby leading to new ways of exploiting resources and increasing standards of living.6 As we move into the twenty-first century this vision of a cornucopian “horn of plenty,” with its image of limitless barrels of fish being continuously replenished by the magic, not of divine intervention, but of the free expression of human ingenuity and the boundless possibilities of a free market economy, has reemerged as a significant component of corporate and political conceptual thinking. Indeed, Simon’s views have effectively been embraced by many in the academic, business, and political communities. A succinct summary of this view was articulately expressed by the economist Paul Romer, one of the founders of endogenous growth theory, which holds that economic growth is driven primarily by investment in human capital, innovation, and knowledge creation.7 Romer declares that “every generation has perceived the limits to growth that finite resources and undesirable side effects would pose if no new recipes or ideas were discovered.

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Among its founding fathers were two other major figures of twentieth-century academia, both Nobel laureates: Philip Anderson, a condensed matter physicist from Princeton University who had worked on superconductivity and was an inventor, among many other things, of the mechanism of symmetry breaking that underlies the prediction of the Higgs particle; and Kenneth Arrow from Stanford University, whose many contributions to the fundamental underpinnings of economics, from social choice to endogenous growth theory, have been hugely influential. He was the youngest person ever to have been awarded the Nobel Memorial Prize for economics, which five of his students have also received. Anderson and Arrow together with David Pines, also a distinguished condensed matter physicist and founder of SFI, initiated the first major program that put SFI on the map.

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Both are provocative and somewhat controversial. 4. P. Ehrlich, The Population Bomb (New York: Ballantine Books, 1968). 5. D. Meadows, et al., The Limits to Growth (New York: Universe Books, 1972). 6. J. Simon, The Ultimate Resource (Princeton, NJ: Princeton University Press, 1981). 7. P. M. Romer, “The Origins of Endogenous Growth,” Journal of Economic Perspectives 8(1) (1994): 3–22. 6. PRELUDE TO A SCIENCE OF CITIES 1. J. Moore, “Predators and Prey: A New Ecology of Competition,” Harvard Business Review 71(3) (1993): 75. 2. The results of the program are summarized in the volume edited by D. Lane, et al., Complexity Perspectives in Innovation and Social Change (Berlin: Springer-Verlag, 2009). 3.

Superintelligence: Paths, Dangers, Strategies
by Nick Bostrom
Published 3 Jun 2014

Some tentative attempts have been made to develop the idea of an intelligence explosion within the framework of economic growth theory; see, e.g., Hanson (1998b); Jones (2009); Salamon (2009). These studies have pointed to the potential of extremely rapid growth given the arrival of digital minds, but since endogenous growth theory is relatively poorly developed even for historical and contemporary applications, any application to a potentially discontinuous future context is better viewed at this stage as a source of potentially useful concepts and considerations than as an exercise likely to deliver authoritative forecasts.

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Upper Saddle River, NJ: Prentice-Hall. Sabrosky, Curtis W. 1952. “How Many Insects Are There?” In Insects, edited by United States Department of Agriculture, 1–7. Yearbook of Agriculture. Washington, DC: United States Government Printing Office. Salamon, Anna. 2009. “When Software Goes Mental: Why Artificial Minds Mean Fast Endogenous Growth.” Working Paper, December 27. Salem, D. J., and Rowan, A. N. 2001. The State of the Animals: 2001. Public Policy Series. Washington, DC: Humane Society Press. Salverda, W., Nolan, B., and Smeeding, T. M. 2009. The Oxford Handbook of Economic Inequality. Oxford: Oxford University Press. Samuel, A.

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Translated by N. Zahavi-Ely and M. P. Ely. New York: Oxford University Press. Zalasiewicz, J., Williams, M., Smith, A., Barry, T. L., Coe, A. L., Bown, P. R., Brenchley, P., et al. 2008. “Are We Now Living in the Anthropocene?” GSA Today 18 (2): 4–8. Zeira, Joseph. 2011. “Innovations, Patent Races and Endogenous Growth.” Journal of Economic Growth 16 (2): 135–56. Zuleta, Hernando. 2008. “An Empirical Note on Factor Shares.” Journal of International Trade and Economic Development 17 (3): 379–90. INDEX A Afghan Taliban 215 Agricultural Revolution 2, 80, 261 AI-complete problem 14, 47, 71, 93, 145, 186 AI-OUM, see optimality notions AI-RL, see optimality notions AI-VL, see optimality notions algorithmic soup 172 algorithmic trading 16–17 anthropics 27–28, 126, 134–135, 174, 222–225 definition 225 Arendt, Hannah 105 Armstrong, Stuart 280, 291, 294, 302 artificial agent 10, 88, 105–109, 172–176, 185–206; see also Bayesian agent artificial intelligence arms race 64, 88, 247 future of 19, 292 greater-than-human, see superintelligence history of 5–18 overprediction of 4 pioneers 4–5, 18 Asimov, Isaac 139 augmentation 142–143, 201–203 autism 57 automata theory 5 automatic circuit breaker 17 automation 17, 98, 117, 160–176 B backgammon 12 backpropagation algorithm 8 bargaining costs 182 Bayesian agent 9–11, 123, 130; see also artificial agent and optimality notions Bayesian networks 9 Berliner, Hans 12 biological cognition 22, 36–48, 50–51, 232 biological enhancement 36–48, 50–51, 142–143, 232; see also cognitive enhancement boxing 129–131, 143, 156–157 informational 130 physical 129–130 brain implant, see cyborg brain plasticity 48 brain–computer interfaces 44–48, 51, 83, 142–143; see also cyborg Brown, Louise 43 C C. elegans34–35, 266, 267 capability control 129–144, 156–157 capital 39, 48, 68, 84–88, 99, 113–114, 159–184, 251, 287, 288, 289 causal validity semantics 197 CEV, see coherent extrapolated volition Chalmers, David 24, 265, 283, 295, 302 character recognition 15 checkers 12 chess 11–22, 52, 93, 134, 263, 264 child machine 23, 29; see also seed AI CHINOOK 12 Christiano, Paul 198, 207 civilization baseline 63 cloning 42 cognitive enhancement 42–51, 67, 94, 111–112, 193, 204, 232–238, 244, 259 coherent extrapolated volition (CEV) 198, 211–227, 296, 298, 303 definition 211 collaboration (benefits of) 249 collective intelligence 48–51, 52–57, 67, 72, 142, 163, 203, 259, 271, 273, 279 collective superintelligence 39, 48–49, 52–59, 83, 93, 99, 285 definition 54 combinatorial explosion 6, 9, 10, 47, 155 Common Good Principle 254–259 common sense 14 computer vision 9 computing power 7–9, 24, 25–35, 47, 53–60, 68–77, 101, 134, 155, 198, 240–244, 251, 286, 288; see also computronium and hardware overhang computronium 101, 123–124, 140, 193, 219; see also computing power connectionism 8 consciousness 22, 106, 126, 139, 173–176, 216, 226, 271, 282, 288, 292, 303; see also mind crime control methods 127–144, 145–158, 202, 236–238, 286; see also capability control and motivation selection Copernicus, Nicolaus 14 cosmic endowment 101–104, 115, 134, 209, 214–217, 227, 250, 260, 283, 296 crosswords (solving) 12 cryptographic reward tokens 134, 276 cryptography 80 cyborg 44–48, 67, 270 D DARPA, see Defense Advanced Research Projects Agency DART (tool) 15 Dartmouth Summer Project 5 data mining 15–16, 232, 301 decision support systems 15, 98; see also tool-AI decision theory 10–11, 88, 185–186, 221–227, 280, 298; see also optimality notions decisive strategic advantage 78–89, 95, 104–112, 115–126, 129–138, 148–149, 156–159, 177, 190, 209–214, 225, 252 Deep Blue 12 Deep Fritz 22 Defense Advanced Research Projects Agency (DARPA) 15 design effort, see optimization power Dewey, Daniel 291 Differential Technological Development (Principle of) 230–237 Diffie–Hellman key exchange protocol 80 diminishing returns 37–38, 66, 88, 114, 273, 303 direct reach 58 direct specification 139–143 DNA synthesis 39, 98 Do What I Mean (DWIM) 220–221 domesticity 140–143, 146–156, 187, 191, 207, 222 Drexler, Eric 239, 270, 276, 278, 300 drones 15, 98 Dutch book 111 Dyson, Freeman 101, 278 E economic growth 3, 160–166, 179, 261, 274, 299 Einstein, Albert 56, 70, 85 ELIZA (program) 6 embryo selection 36–44, 67, 268 emulation modulation 207 Enigma code 87 environment of evolutionary adaptedness 164, 171 epistemology 222–224 equation solvers 15 eugenics 36–44, 268, 279 Eurisko 12 evolution 8–9, 23–27, 44, 154, 173–176, 187, 198, 207, 265, 266, 267, 273 evolutionary selection 187, 207, 290 evolvable hardware 154 exhaustive search 6 existential risk 4, 21, 55, 100–104, 115–126, 175, 183, 230–236, 239–254, 256–259, 286, 301–302 state risks 233–234 step risks 233 expert system 7 explicit representation 207 exponential growth, see growth external reference semantics 197 F face recognition 15 failure modes 117–120 Faraday cage 130 Fields Medal 255–256, 272 Fifth-Generation Computer Systems Project 7 fitness function 25; see also evolution Flash Crash (2010) 16–17 formal language 7, 145 FreeCell (game) 13 G game theory 87, 159 game-playing AI 12–14 General Problem Solver 6 genetic algorithms 7–13, 24–27, 237–240; see also evolution genetic selection 37–50, 61, 232–238; see also evolution genie AI 148–158, 285 definition 148 genotyping 37 germline interventions 37–44, 67, 273; see also embryo selection Ginsberg, Matt 12 Go (game) 13 goal-content 109–110, 146, 207, 222–227 Good Old-Fashioned Artificial Intelligence (GOFAI) 7–15, 23 Good, I.

An Extraordinary Time: The End of the Postwar Boom and the Return of the Ordinary Economy
by Marc Levinson
Published 31 Jul 2016

Despite stacks of policy memos and a great deal of fancy mathematics, understanding of why the good times disappeared has not increased with time. Back in the 1990s, the American academic Paul Romer revolutionized thinking about economic growth by insisting that innovation and knowledge matter far more than labor and capital; “endogenous growth theory,” the unwieldy name attached to his work, taught that strengthening education, supporting scientific research, and making entrepreneurship easy would do more to improve economic growth than fretting over budget deficits and tax rates. Three decades after his theory swept through economics departments everywhere, Romer was no longer sure he was right.

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See also under specific countries Ecuador, 250–251 education, 145; ungovernability and, 155, 157 Egypt, 1, 69, 73 Ehrlich, Paul, 61 Eisenhower, Dwight, 24, 48, 105, 144 electricity, deregulation of, 113 Emminger, Otmar, 86 employment/unemployment. See full employment; Full Employment Act; magic square; Phillips Curve; under specific countries, economists, Federal Reserve chairmen, presidents, prime ministers, etc.; unemployment endogenous growth theory, 9 energy sector, 99–100, 101, 102, 103–109, 110, 113 England, 170, 190, 196; income inequality in, 135 entitlements, 157–158 environmental protection, 259 environmental regulation, 64 environmentalism: economic growth and, 57, 59–63; technology and, 63–64. See also pollution; population growth Erhard, Ludwig, 30–31 Europe, 124, 140; bank loans to Third World and, 241; crisis cartels in, 127; Davignon Plan and, 127; debt crisis in, 247; deregulation in, 113; economic slowdown in, 3–4; economy at close of World War II in, 16–17, 19–20; financial crisis of 2008 in, 270; income per person in, 6; income tax in, 146; manufacturing and trade with Japan in, 125–127; oil crisis of 1973 in, 1–2, 3; postwar productivity in, 24; productivity slowdown in, 265; unemployment in, 176; welfare state in, 144 European Community, 152, 168, 213, 214, 215; regional assistance and, 126–127 European countries: economic forecasts in 1973 and, 66–67; economy at close of World War II in, 18–19; postwar trade in, 23.

The Economics of Inequality
by Thomas Piketty and Arthur Goldhammer
Published 7 Jan 2015

Just because capital has not been invested in the poor countries, which have remained poor, it does not follow that credit market imperfections are solely responsible. If, for instance, we control for the “initial stock of human capital” in 1960 (as measured by literacy rates, educational levels, and so on), we find that there is a negative correlation between initial per capita income in 1960 and average growth rate in the period 1960–1990. Endogenous growth theorists refer to this as “conditional” convergence as opposed to the “unconditional” convergence predicted by the Solow model (Mankiw et al., 1992). For example, South American countries with the same per capita income as the Asian tigers in 1960 had a much lower stock of human capital, because large segments of the population had been totally neglected, whereas in Asia inequality was much lower.

The Case Against Education: Why the Education System Is a Waste of Time and Money
by Bryan Caplan
Published 16 Jan 2018

“Many Schools Putting an End to Child’s Play.” New York Times. April 7. http://www.nytimes.com/1998/04/07/us/many-schools-putting-an-end-to-child-s-play.html. Johnson, Matthew. 2013. “Borrowing Constraints, College Enrollment, and Delayed Entry.” Journal of Labor Economics 31 (4): 669–725. Jones, Charles. 1995. “Time Series Tests of Endogenous Growth Models.” Quarterly Journal of Economics 110 (2): 495–525. ———. 2005. “Growth and Ideas.” In Handbook of Economic Growth, vol. 1, edited by Philippe Aghion and Steven Durlauf, 1063–111. Amsterdam: Elsevier. Jones, Garett. 2016. Hive Mind: How Your Nation’s IQ Matters So Much More Than Your Own.

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Owen, Stephanie, and Isabel Sawhill. 2013. Should Everyone Go to College? Washington, DC: Brookings Institute. http://www.brookings.edu/~/media/research/files/papers/2013/05/07-should-everyone-go-to-college-owen-sawhill/08-should-everyone-go-to-college-owen-sawhill.pdf. Pack, Howard. 1994. “Endogenous Growth Theory: Intellectual Appeal and Empirical Shortcomings.” Journal of Economic Perspectives 8 (1): 55–72. Park, Jin. 1994. “Estimation of Sheepskin Effects and Returns to Schooling Using the Old and the New CPS Measures of Educational Attainment.” Industrial Relations Section, Princeton University Working Paper No. 338. http://harris.princeton.edu/pubs/pdfs/338.pdf. ———. 1999.

The Nature of Technology
by W. Brian Arthur
Published 6 Aug 2009

The interpretation of technology buildout in this section is very much my own. 150 The old dispensations persist: David Edgerton, The Shock of the Old: Technology and Global History Since 1900, Oxford University Press, New York, 2006. 150 A domain morphs: Rosenberg points out that the original applications of a technology are seldom the ones it ends up with. 152 the arrival of… technology: It also sets in motion economic growth. How this happens is the subject of a branch of economics called endogenous growth theory. The arrival of a new technology means that the economy needs to use fewer resources on that purpose than it did before, thus releasing them. The knowledge inherent in the new technology can also spill over into other industries. For both these reasons, the economy grows. 152 The coming of the railroad: For more detailed accounts of its economic impact, see Robert W.

Social Democratic America
by Lane Kenworthy
Published 3 Jan 2014

“Using Expenditures to Measure the Standard of Living in the United States: Does It Make a Difference?” Pp. 27–47 in What Has Happened to the Quality of Life in the Advanced Industrialized Nations? Edited by Edward N. Wolff. Cheltenham, UK: Edward Elgar. Jones, Charles I. 1995. “Time Series Tests of Endogenous Growth Models.” Quarterly Journal of Economics 110: 495–525. Judis, John B. and Ruy Teixeira. 2002. The Emerging Democratic Majority. New York: Scribner. Judt, Tony. 2010. Ill Fares the Land. New York: Penguin. Kahlenberg, Richard. 1995. “Class, Not Race.” New Republic, April 3. Kahneman, Daniel. 2011.

Smart Money: How High-Stakes Financial Innovation Is Reshaping Our WorldÑFor the Better
by Andrew Palmer
Published 13 Apr 2015

François Velde and David Weir, “The Financial Market and Government Debt Policy in France, 1746–1793,” Journal of Economic History (March 1992). 15. For more on the role of technology in propelling financial innovation, see Stelios Michalopoulos, Luc Laeven, and Ross Levine, “Financial Innovation and Endogenous Growth” (NBER Working Paper 51356, September 2009). 16. Richard Sylla, “A Historical Primer on the Business of Credit Ratings” (paper prepared for a conference of the World Bank, Washington, DC, March 2001). 17. Andrew Odlyzko, “Collective Hallucinations and Inefficient Markets: The British Railway Mania of the 1840s,” SSRN Electronic Journal (2010). 18.

The Global Minotaur
by Yanis Varoufakis and Paul Mason
Published 4 Jul 2015

A lower level of economic activity would have, indeed, been fine as long as employment had picked up quickly and the lower wages were able, in conjunction with lower prices, to preserve a level of consumption consistent with calm but steady recovery. Alas, the success of the banking sector in ensuring that monetary policy was tuned towards their interests, just like in the good old (pre-2008) times, guaranteed that endogenous growth was out of the reach of American society. When taken together with (a) Europe’s suicidal dallying with Herbert Hoover-like austerity4 (at a time when half of the continent is in the clasps of its own Great Depression), and (b) China’s structural failure to stimulate domestic demand, it is no great wonder that the Crisis remains with us.

The Origins of Political Order: From Prehuman Times to the French Revolution
by Francis Fukuyama
Published 11 Apr 2011

Friedman, The Lexus and the Olive Tree (New York: Farrar, Straus and Giroux, 1999), pp. 99–108. 23 See, for example, Ron Paul, End the Fed (New York: Grand Central Publishing, 2009); Charles Murray, What It Means to Be a Libertarian: A Personal Interpretation (New York: Broadway Books, 1997). 24 See Francis Fukuyama, ed., Nation-Building: Beyond Afghanistan and Iraq (Baltimore: Johns Hopkins University Press, 2006). 25 “Getting to Denmark” was actually the original title of Lant Pritchett and Michael Woolcock’s “Solutions When the Solution Is the Problem: Arraying the Disarray in Development” (Washington, D.C.: Center for Global Development Working Paper 10, 2002). 26 Economic growth theories under titles like Harrod-Domar, Solow, and endogenous growth theory, are severely reductionist and are of questionable value in explaining how growth actually happens in developing countries. 27 A number of observers have made this argument, beginning with Herbert Spencer in the nineteenth century, continuing through Werner Sombart, John Nef, and Charles Tilly.

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democratization Demonic Males (Wrangham) Deng, Kent Deng Xiaoping Denmark; accountability in; as model for development; Protestant Reformation in; serfdom abolished in deoxyribonucleic acid, see DNA depression, chronic Descartes, René devshirme de Waal, Frans Dharmasastras Díaz, Porfirio Diet; Danish; Hungarian Diggers Dinka people Discourse on the Origin and Foundation of Inequality Among Mankind (Rousseau) Di tribe DNA; mitochondrial Dolgorukov family Domesday Book Dong Zhuo Douglas, Stephen Downing, George Dravidians Duma, Russian Dumont, Louis Durkheim, Émile Dutch United Provinces Eastern church Eastern Depot East India Company Ecuador Egypt; ancient; Fatimid caliphate in; Mamluk sultanate in; in Ottoman Empire; Umayyad conquest of Eisenstein, Sergei Electronic Frontier Foundation Ellickson, Robert Elliott, J. H. El Salvador encabezamiento Enclosure Movement, British encomiendas endogenous growth theory Engel, Pal Engels, Friedrich England; accountability in; census in; centralized state in; Civil War in, see English Civil War; constitutional compromise of barons and king in, see Magna Carta; democracy in; feudalism in; free cities and bourgeoisie in; Glorious Revolution in, see Glorious Revolution; individualism in; industrialization of (see also Industrial Revolution); military expenditures of; New World colonies of; Norman Conquest of; North American colonies of; political and social solidarity in; representative institutions in (see also Parliament, English); rise of capitalism in; rule of law in (see also Common Law); serfdom abolished in; taxation in; tragedy of the commons in; see also Britain English Civil War; Parliament and; progressive radicalization during; in Whig history Enlightenment Ertman, Thomas Eskimos; Copper Essay on the Principle of Population (Malthus) Estates-General, French Ethelbert, King of England; Laws of Ethiopia eunuchs; in China European Court of Human Rights European Union Evans-Pritchard, E.

The Shock of the Old: Technology and Global History Since 1900
by David Edgerton
Published 7 Dec 2006

For example, a recent book on innovation and economic performance, most of it arranged in typical fashion in chapters based on nations, expresses surprise that in the case of Japan recent economic performance has not been on a par with the country’s huge R&D spending, which is second only to that of the USA in scale.13 In the 1990s crude versions of endogenous growth theory, which claimed that inputs such as R&D led to growth, globally and nationally, flourished. So powerful has this innovation-centric view been, especially in its nationalistic versions, that all evidence to the contrary has been studiously ignored. It was known in the 1960s that national rates of economic growth did not correlate positively with national investments in invention, research and development, or innovation.

The Globalization Paradox: Democracy and the Future of the World Economy
by Dani Rodrik
Published 23 Dec 2010

This is true regardless of the existence of market imperfections. However, there may be growth effects during the transition to the steady state. (These transitional effects could be positive or negative depending on how the long-run level of output is affected by the trade restriction.) In models of endogenous growth generated by non-diminishing returns to reproducible factors of production or by learning-by-doing and other forms of endogenous technological change, the presumption is that lower trade restrictions boost output growth in the world economy as a whole. But a subset of countries may experience diminished growth depending on their initial factor endowments and levels of technological development.

Rockonomics: A Backstage Tour of What the Music Industry Can Teach Us About Economics and Life
by Alan B. Krueger
Published 3 Jun 2019

Petra Moser, “Patents and Innovation in Economic History,” NBER Working Paper No. 21964, 2016. 19. This point has been emphasized by the Nobel Prize–winning economist Paul Romer, who wrote, “When more people start prospecting for gold or experimenting with bacteria, more valuable discoveries will be made.” See Paul M. Romer, “The Origins of Endogenous Growth,” Journal of Economic Perspectives 8, no. 1 (1994): 3–22. 20. See Lorie Hollabaugh, “Florida Georgia Line, Bebe Rexha Hit One Billion Streaming Mark,” MusicRow, May 30, 2018; Jim Asker, “Bebe Rexha & Florida Georgia Line’s ‘Meant to Be’ Breaks Record for Longest Rule in Hot Country Songs Chart’s History,” Billboard, Jul. 30, 2018. 21.

Growth: From Microorganisms to Megacities
by Vaclav Smil
Published 23 Sep 2019

In modern economies, gains in TFP—subsuming the effect of innovation and technical advances or, most fundamentally, the level of deployed knowledge—have contributed more to the measured growth of labor productivity than the growth in capital invested per worker, and they have often (but not always) accounted for the single largest share among the trio of key growth factors (Shackleton 2013). A new wave of growth studies began during the 1980s and it has been distinguished by its focus on endogenous growth factors, above all on technical advances and improvements in human capital (education, health), but also on diffusion of innovations, government policies (affecting the ease of doing business, taxation, infrastructural upgrading or maintenance), and population changes (demographic transition, dependency ratios, aging).

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This matrix provides a useful tool for mapping the explanatory approaches. Neoclassical theory explains growth by focusing on the linkages of capital and labor, Keynes saw nearly all of the action confined to government policies. Geographic determinism is concerned with interactions of climate and soils, even the shape of continents, and population growth. Endogenous growth theory concentrates above all on how technical advances interact with economic growth, and yet other theories see institutional arrangements (including the rule of law and low levels of corruption) as preeminent drivers of economic growth. There are too many theories investigating in detail these specific links between individual factors and economic growth to present their systematic review.

The Skeptical Economist: Revealing the Ethics Inside Economics
by Jonathan Aldred
Published 1 Jan 2009

A large body of psychological research suggests that these preoccupations are associated with increased rates of mental illness, including depression, substance abuse, anxiety and personality disorder.4 Less dramatically, and anecdotally, we can live in a prosperous economic environment, and still discover that modern life is rubbish. So how can a better understanding of economics help? Talk of improving quality of life might provoke expectations that the following chapters include detailed discussions of integrated transport policies, pension reforms and endogenous growth theory. In other words, the kind of policy wonkery which few of us care passionately about. But we do care about the principles at stake - whether it is fair to tax the rich more highly, whether environmental damage can be boiled down to a sum of money, whether surveys can really measure our quality of life or happiness.

The Evolution of Everything: How New Ideas Emerge
by Matt Ridley

As she put it in a lecture in India in 2014, the enrichment of the poor has resulted not from charity, planning, protection, regulation or trade unions, all of which merely redistribute money, but from innovation caused by markets, which have not been bad for the poor: ‘The sole reliable good for the poor, on the contrary, has been the liberating and the honoring of market-tested improvement and supply.’ But does innovation just happen, or is it in itself a product that can be created? This is the question that Paul Romer tackled in the 1990s with his theory of endogenous growth. Technical advances are not just by-products of growth, he argued, but investments that firms can deliberately make. Given the right institutions – a market in which to sell your product, the rule of law to prevent theft, a decent system of finance and taxation to incentivise you, some intellectual property protection, but not too much – you can set out to make an innovation and reap the rewards from it, despite sharing it with the world, in the same way you can set out to build a machine.

The Economics of Enough: How to Run the Economy as if the Future Matters
by Diane Coyle
Published 21 Feb 2011

Saving in order to invest in the future is an important characteristic of a healthy economy and society. The Nobel economist Paul Krugman (in one of his nonpolemical outings) wrote a profound paper about what it is about a society that delivers economic growth.8 Why are some dynamic and others stagnant? He presented this as a formal endogenous growth model, in which the path the economy takes is described by a series of equations that capture the way inputs of capital, labor, and human capital (that is, people’s intelligence, skills, and knowledge) are turned into outputs of goods and services, and the way investment in both physical and human capital comes about.

What We Owe the Future: A Million-Year View
by William MacAskill
Published 31 Aug 2022

Note, however, that Stark’s argument relies more on the Mormons’ successful missionary efforts than their unusually high fertility: “One reason for Mormon growth is that their fertility is sufficiently high to offset both mortality and defection. But a more important reason is a rapid rate of conversion. Indeed, the majority of Mormons today were not born in the faith, but were converted to it” (Stark 1984, 22). Kaufmann (2010, 30) indicates this was still true more recently but also notes that “endogenous growth [i.e., from higher birth rates] is often more enduring” because “rapid conversion is often accompanied by rapid exit.” 54. Perlich 2016. 55. Arenberg et al. 2021, 3–5. 56. Makdisi 1973, 155–168; Gibb 1982, 3–33; Bisin et al. 2019. 57. See whatweowethefuture.com/notes. 58. Indeed, getting back to sufficient population size to drive technological progress would take long enough that there would be no immediate reward of population growth from new technological innovation—population growth would only make a country richer in hundreds of years’ time.

Against Intellectual Monopoly
by Michele Boldrin and David K. Levine
Published 6 Jul 2008

He is a coeditor of Econometrica and NAJ Economics, president of the Society for Economic Dynamics, a Fellow of the Econometric Society, and a research associate of the National Bureau for Economic Research. Author with Drew Fudenberg of Learning in Games and editor of several conference volumes, his research interests include the study of intellectual property and endogenous growth in dynamic general equilibrium models; the endogenous formation of preferences, institutions, and social norms; and the application of game theory to experimental economics. Levine has published in leading journals such as American Economic Review, Econometrica, Review of Economic Studies, Journal of Political Economy, Journal of Economic Theory, Quarterly Journal of Economics, and American Political Science Review.

The Life and Death of Ancient Cities: A Natural History
by Greg Woolf
Published 14 May 2020

Nor—to dispose quickly of some other bad answers—is there any evidence that urbanism is contagious, that nonurbanized societies are inevitably transformed by contact with urbanized ones, nor that economic or demographic growth always leads, eventually, to the city. It is not plausible either, however, that it was just an accident that the first Mediterranean cities appeared first in that part of the region that was closest to Egypt and the ancient Near East. Autonomous, endogenous growth is not a good answer either. Cyprus, Crete, and the rest of the Aegean world came to form part of a broad nexus in which the extension of long-distance networks of exchanges and experiments in urbanism supported each other. The growing potential for these developments arose in part from the elaboration of the multispecies societies humans had been engaged in since the late Pleistocene.

Slouching Towards Utopia: An Economic History of the Twentieth Century
by J. Bradford Delong
Published 6 Apr 2020

Hegel, Letter to [Karl Ludwig von] Knebel, August 30, 1807, NexusMods, www.nexusmods.com/cyberpunk2077/images/15600, quoted in Walter Benjamin, On the Concept of History, 1940, translated by Dennis Redmond, August 4, 2001, Internet Archive Wayback Machine, https://web.archive.org/web/20120710213703/http://members.efn.org/~dredmond/Theses_on_History.PDF. 20. Madeleine Albright, Fascism: A Warning, New York: HarperCollins, 2018. 21. Fred Block, “Introduction,” in Karl Polanyi, Great Transformation. 22. See Charles I. Jones, “Paul Romer: Ideas, Nonrivalry, and Endogenous Growth,” Scandinavian Journal of Economics 121, no. 3 (2019): 859–883. 23. Clark, Farewell, 91–96. 24. Simon Kuznets, Modern Economic Growth: Rate, Structure, and Spread, New Haven, CT: Yale University Press, 1966. 25. Edward Shorter and Lawrence Shorter, A History of Women’s Bodies, New York: Basic Books, 1982.

The Rise and Fall of the British Nation: A Twentieth-Century History
by David Edgerton
Published 27 Jun 2018

For New Labour there was no longer a problem of underperforming British capitalism. There was, it seemed, a New Economy, a new weightless, past-less economy, which appeared to defy what seemed like old-fashioned laws of economic gravity, not least in the stock market boom which ran into 1999. People made fun of Gordon Brown for talking of ‘neo-endogenous growth theory’, but it was rather revealing that he was making a very general economic argument which suggested that what really mattered in growth was R&D and ‘human capital’, and not such things as investment or trade policy. For Brown, ‘It is a knowledge-based economy, in which the key to success and profitability is to get the best out of our people and all their potentials.’27 The 1997 manifesto was quite clear that, as far the economy was concerned, we ‘accept the global economy as a reality and reject the isolationism and “go-it-alone” policies of the extremes of right or left’.28 It was ‘a new and revitalised Labour Party that has been resolute in transforming itself into a party of the future,’ claimed the 1997 manifesto.

Global Catastrophic Risks
by Nick Bostrom and Milan M. Cirkovic
Published 2 Jul 2008

It should go without saying that this has been a very crude and initial analysis; a similar but more careful and numerically precise analysis might be well worth the effort. Acknowledgement I thank Jason Matheny, the editors, and an anonymous referee. For their financial support, I thank the Center for Study of Public Choice and the Mercatus Center. 376 Global catastrophic risks References Aghion, P., and Howitt, P. ( 1998) . Endogenous Growth Theory. London: M IT Press. Barro, R.J. and Sala-I-Martin, X. (2003). Economic Growth, 2nd edition. London: M IT Press. Barton, C. and Nishenko, S. (1997). Natural Disasters: Forecasting Economic and Life Losses. http:/ fpubs.usgs.govjfsjnatural-disastersf Bilham, R. (2004). Urban earthquake fatalities - a safer world or worse to come?

Enlightenment Now: The Case for Reason, Science, Humanism, and Progress
by Steven Pinker
Published 13 Feb 2018

Washington: Pew Reseach Center. http://www.pewglobal.org/2007/07/24/happiness-is-increasing-in-many-countries-but-why/#rich-and-happy. Stork, N. E. 2010. Re-assessing current extinction rates. Biodiversity and Conservation, 19, 357–71. Stuermer, M., & Schwerhoff, G. 2016. Non-renewable resources, extraction technology, and endogenous growth. National Bureau of Economic Research. https://paulromer.net/wp-content/uploads/2016/07/Stuermer-Schwerhoff-160716.pdf. Suckling, K., Mehrhof, L. A., Beam, R., & Hartl, B. 2016. A wild success: A systematic review of bird recovery under the Endangered Species Act. Tucson, AZ: Center for Biological Diversity. http://www.esasuccess.org/pdfs/WildSuccess.pdf.

A Classless Society: Britain in the 1990s
by Alwyn W. Turner
Published 4 Sep 2013

(That terminology, incidentally, was not itself new; there were Labour MPs in the 1980s who had talked disparagingly about the ‘Mandelson project’, while the party’s press officer Andy McSmith used to refer to ‘the Kinnockite project’.) Not even Gordon Brown was of much significance in terms of public presentation, and his best-known speech in opposition had been the one containing the explanation in 1994 that ‘Our new economic approach is rooted in ideas which stress the importance of macro-economic, neoclassical endogenous growth theory.’ The subsequent discovery that this had been written by Brown’s youthful adviser, Ed Balls, prompted one of Michael Heseltine’s crowd-pleasing gags at the Tory conference, when he announced of the policy that ‘It’s not Brown’s, it’s Balls’. The response to Blair in the Labour Party was mixed.

Strategy: A History
by Lawrence Freedman
Published 31 Oct 2013

Sufficient resources might result in a form of victory, but the competition was essentially redistributive in that the share gained by one would be lost by another, which led to an attritional logic. The theory assumed exogenous limits. By contrast, the reconstructionist approach was derived from endogenous growth theory, which claimed that the ideas and actions of individual players could change the economic and industrial landscape. Such a strategy would suit an organization with an innovative bent and sensitivity to the risks of missing future opportunities. This addressed the demand side by using innovative techniques to create new markets.