Economic Development, Innovation, Technological Change, and Growth
Development economics and growth theory study why some economies grow rich while others remain poor, and what drives long-run increases in living standards.
Scope
This field (JEL category O) covers theories of economic growth, technological change and innovation, human capital, institutions, and the economics of developing countries, from formal growth models to field experiments in development policy.
Sub-topics
Core questions
- What determines long-run economic growth?
- Why are some countries rich and others poor?
- What role do institutions, technology, and human capital play?
- How does growth relate to inequality and welfare?
- What development policies actually work?
Key concepts
- Economic growth
- Convergence
- Total factor productivity
- Endogenous technology
- Human capital
- Institutions
- Capabilities
- Poverty traps
Key theories
- Neoclassical growth
- Solow's model attributes growth to capital accumulation and exogenous technical change, implying conditional convergence.
- Endogenous growth
- Romer and Lucas made technology and human capital endogenous, with increasing returns allowing sustained growth and divergence.
- Institutions and development
- Acemoglu, Johnson, and Robinson used colonial history to argue that institutions are a fundamental cause of long-run prosperity.
- Capabilities and human development
- Sen reframed development as the expansion of human freedoms and capabilities, not merely income growth.
History
Growth theory began with the Harrod-Domar and Solow (1956) models; the 1980s endogenous-growth revolution (Romer, Lucas) made technology and human capital central. Development economics moved from big-push and dependency theories to institutions (Acemoglu et al.), the capabilities approach (Sen), and, since the 2000s, the experimental 'randomista' turn in development policy.
Debates
- Why do countries diverge?
- Whether the deep cause of differing prosperity is geography, institutions, or culture remains a central debate.
- What is development?
- Income-growth measures contend with broader capability- and freedom-based conceptions of development.
Key figures
- Robert Solow
- Paul Romer
- Robert Lucas
- Daron Acemoglu
- Amartya Sen
Related topics
Seminal works
- solow-1956
- romer-1986
- acemoglu-2001
- sen-1999
Frequently asked questions
- What is the difference between growth and development?
- Growth refers to increases in output per capita; development is broader, including health, education, institutions, and freedoms.
- What is endogenous growth?
- Theories in which the growth rate is determined within the model — by investment in knowledge, innovation, or human capital — rather than by exogenous technical progress.