Abstract
In this chapter we argue that the endogenous growth model with quality-improving innovations provides a framework for analyzing the determinants of long-run growth and convergence that is versatile, simple and empirically useful.
Versatile, as the same framework can be used to analyze how growth interacts with development and crosscountry convergence and divergence, how it interacts with industrial organization and in particular market structure, and how it interacts with organizations and institutional change. simple, since all these aspects can be analyzed using the same elementary model. Empirically useful, as the framework generates a whole range of new microeconomic and macroeconomic predictions while it addresses empirical criticisms raised by other endogenous growth models in the literature.Keywords
growth, innovation, convergence, competition, scale effect, institutions
JEL classification: O1, O31, O40
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