A Nonscale Growth Model with R&D and Human Capital Accumulation
This paper presents an endogenous growth model that includes research and development and human capital accumulation. The model’s specification builds on the R&D-based structure of Romer’s  model and introduces two functions: (1) A specification for the production of new designs that assumes no externalities and no inventions before time zero; and (2) A specification for the accumulation of human capital technically similar to that in Lucas . The model displays two main results. The first is that it eliminates the scale-effects prediction which is common to most R&D-based growth models, but which is not empirically supported. Secondly, the model offers a new prediction that growth depends positively on the ratio of final-good workers to researchers. Thus the model provides a theoretical explanation as to why developed countries have had rising numbers of researchers but not rising growth rates in the twentieth century.
|Date of creation:||2003|
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