Endogenous Technological Change

45 Pages Posted: 4 Dec 2000 Last revised: 11 Apr 2021

See all articles by Paul M. Romer

Paul M. Romer

National Bureau of Economic Research (NBER)

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Date Written: December 1989

Abstract

Growth in this model is driven by technological change that arises from intentional investment decisions made by profit maximizing agents. The distinguishing feature of the technology as an input is that it is neither a conventional good nor a public good; it is a nonrival, partially excludable good. Because of the nonconvexity introduced by a nonrival good, price-taking competition cannot be supported, and instead, the equilibriumis one with monopolistic competition. The main conclusions are that the stock of human capital determines the rate of growth, that too little human capital is devoted to research in equilibrium, that integration into world markets will increase growth rates, and that having a large population is not sufficient to generate growth.

Suggested Citation

Romer, Paul M., Endogenous Technological Change (December 1989). NBER Working Paper No. w3210, Available at SSRN: https://ssrn.com/abstract=226703

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