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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.

Suggested Citation

  • Creina Day, 2016. "Non-scale endogenous growth with R&D and human capital," CAMA Working Papers 2016-62, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
  • Handle: RePEc:een:camaaa:2016-62
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    Cited by:

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    2. Lai, Chung-Hui & Hu, Shih-Wen & Wang, Vey & Chao, Chi-Chur, 2017. "Agricultural R&D, policies, (in)determinacy, and growth," International Review of Economics & Finance, Elsevier, vol. 51(C), pages 328-341.
    3. Garcia Martinez, Marian & Zouaghi, Ferdaous & Garcia Marco, Teresa & Robinson, Catherine, 2019. "What drives business failure? Exploring the role of internal and external knowledge capabilities during the global financial crisis," Journal of Business Research, Elsevier, vol. 98(C), pages 441-449.
    4. Zouaghi, Ferdaous & Sánchez, Mercedes & Martínez, Marian García, 2018. "Did the global financial crisis impact firms' innovation performance? The role of internal and external knowledge capabilities in high and low tech industries," Technological Forecasting and Social Change, Elsevier, vol. 132(C), pages 92-104.

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