May 25 2006
On Growth Theory
Found a book review on the Economist website: The growth of growth theory
Key facts, agents:
Robert Solow, 1956-57, later a Nobel Laureate, published of two papers on economic growth: the efforts of policymakers to raise the rate of growth per head are ultimately futile.
Only technological advance can speed up economic growth.
Paul Romer, of Stanford University, documented by David Warsh in“Knowledge and the Wealth of Nations:”If technological progress dictates economic growth, what kind of economics governs technological advance?
Conclusion: Unless idea factories can enjoy some measure of monopoly over their designs—by patenting them, copyrighting them, or just keeping them secret—they will not be able to cover the fixed cost of inventing them.
Mr Romer’s theory, by contrast, calls for a more worldly response: educate people, subsidise their research, import ideas from abroad, carefully gauge the protection offered to intellectual property.
—But aren’t those matters too obvious?