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Some Thoughts on Capital Accumulation, Innovation, and Growth


  • Philippe Aghion
  • Peter Howitt


In this paper we introduce capital accumulation in the Schumpeterian growth framework. A first main result is that capital accumulation and innovation are both essential inputs to long-run growth. More innovation stimulates capital accumulation by raising the marginal product of capital. More capital accumulation stimulates innovation by raising the profits accruing to a successful innovator. This result runs counter to the conventional belief to the effect that innovation alone determines the long-run growth rate while capital accumulation determines only the level of the long-run growth path. In the second part of the paper we discuss the implication of merging capital accumulation and innovation-led growth for growth accounting.

Suggested Citation

  • Philippe Aghion & Peter Howitt, 2017. "Some Thoughts on Capital Accumulation, Innovation, and Growth," Annals of Economics and Statistics, GENES, issue 125-126, pages 57-78.
  • Handle: RePEc:adr:anecst:y:2017:i:125-126:p:57-78

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    Endogenous Growth; Innovations; Creative Destruction;
    All these keywords.

    JEL classification:

    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity


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