A Review of Some Postwar Economic Growth Theories and Empirics

The evolution of growth theories from the 1956 seminal work of Solow and Swan to Aghion and Howitt’s 1992 Schumpeterian model is traced herein. How growth empirics helped improve some existing theories is also presented. As a matter of fact, the empirical evidence that countries were not converging as the Solow-Swan model predicted led to the development of endogenous growth theories pioneered by Romer (1986) and Lucas (1988). Thereafter, semi-endogenous growth models originated from the observation that growth rate across countries was not proportional to the size of skilled labor as endogenous growth theories predicted. I also present my own empirical assessment of some predictions from growth theories and find supporting evidence of (1) convergence of GDP across Canada and the countries of the West African Economic and Monetary Union and (2) a positive relationship between output and the accumulation of knowledge through R&D across Canada. I also find, in Canada, the evidence of a positive relationship between economic growth and skilled labor, as some model predicted.