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Non-Scale Endogenous Growth with R&D and Human Capital

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  • Creina Day

Abstract

This paper examines the conditions under which increasing knowledge, encapsulated in ideas for new technology through R&D and embodied in human capital through education, sustains economic growth. We develop a general model where, consistent with recent literature, growth is non-scale (not increasing in population size) and endogenous (generated by factors within R&D and education). Recent models feature the counterfactual assumption of constant returns to existing knowledge and restrict the substitutability of inputs within R&D and education. We find that non-scale endogenous growth is possible under less stringent conditions. Our findings reconcile sustained economic growth with evidence of diminishing marginal returns in education and R&D, which suggests an ambiguous role for R&D policy.
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Suggested Citation

  • Creina Day, 2016. "Non-Scale Endogenous Growth with R&D and Human Capital," Scottish Journal of Political Economy, Scottish Economic Society, vol. 63(5), pages 443-467, November.
  • Handle: RePEc:bla:scotjp:v:63:y:2016:i:5:p:443-467
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    1. repec:eee:reveco:v:51:y:2017:i:c:p:328-341 is not listed on IDEAS
    2. repec:eee:tefoso:v:132:y:2018:i:c:p:92-104 is not listed on IDEAS

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