Bringing Growth Theory "Down to Earth"
AbstractExplicitly accounting for certain basic physical laws governing the “earth” sector dramatically enriches our ability to explain a high degree of diversity in observed patterns of economic growth. We provide a theoretical explanation of why some countries have been able to sustain a more or less constant and positive rate of economic growth for many decades while so many others have failed to do so. The analysis predicts that countries that have an over abundance of physical capital (a concept that is precisely defined in the text) may be unable to sustain a positive rate of economic growth over the long run. Too much physical capital may affect the dynamics of the economy ultimately leading to stagnation. The plausibility of the growth model introduced here is demonstrated by its ability to predict some important stylized facts for which standard endogenous growth models generally cannot account.
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Bibliographic InfoPaper provided by University of Maryland, Department of Agricultural and Resource Economics in its series Working Papers with number 48944.
Date of creation: 2009
Date of revision:
endogenous growth theory; unbalanced growth; structural change; stagnation; Environmental Economics and Policy; International Development; Labor and Human Capital; Political Economy; E22; Q01; O41;
Find related papers by JEL classification:
- E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Capital; Investment; Capacity
- Q01 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - Sustainable Development
- O41 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-05-02 (All new papers)
- NEP-DEV-2009-05-02 (Development)
- NEP-ENV-2009-05-02 (Environmental Economics)
- NEP-FDG-2009-05-02 (Financial Development & Growth)
- NEP-HRM-2009-05-02 (Human Capital & Human Resource Management)
- NEP-MAC-2009-05-02 (Macroeconomics)
- NEP-RES-2009-05-02 (Resource Economics)
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