This comprehensive introduction to economic growth presents the main facts and puzzles about growth, proposes simple methods and models needed to explain these facts, acquaints the reader with the most recent theoretical and empirical developments, and provides tools with which to analyze policy design. The treatment of growth theory is fully accessible to students with a background no more advanced than elementary calculus and probability theory; the reader need not master all the subtleties of dynamic programming and stochastic processes to learn what is essential about such issues as cross-country convergence, the effects of financial development on growth, and the consequences of globalization. The book, which grew out of courses taught by the authors at Harvard and Brown universities, can be used both by advanced undergraduate and graduate students, and as a reference for professional economists in government or international financial organizations. The Economics of Growthfirst presents the main growth paradigms: the neoclassical model, the AK model, Romer's product variety model, and the Schumpeterian model. The text then builds on the main paradigms to shed light on the dynamic process of growth and development, discussing such topics as club convergence, directed technical change, the transition from Malthusian stagnation to sustained growth, general purpose technologies, and the recent debate over institutions versus human capital as the primary factor in cross-country income differences. Finally, the book focuses on growth policies?nalyzing the effects of liberalizing market competition and entry, education policy, trade liberalization, environmental and resource constraints, and stabilization policy?nd the methodology of growth policy design. All chapters include literature reviews and problem sets. An appendix covers basic concepts of econometrics.

Complete Contents p. vii
Preface p. xvii
Acknowledgments p. xxi
Introduction p. 1
Part I p. 19
Neoclassical Growth Theory p. 21
The AK Model p. 47
Product Variety p. 69
The Schumpeterian Model p. 85
Capital, Innovation, and Growth Accounting p. 105
Part II p. 127
Finance and Growth p. 129
Technology Transfer and Cross-Country Convergence p. 151
Market Size and Directed Technical Change p. 169
General-Purpose Technologies p. 193
Stages of Growth p. 217
Institutions and Nonconvergence Traps p. 237
Part III p. 265
Fostering Competition and Entry p. 267
Investing in Education p. 287
Reducing Volatility and Risk p. 319
Liberalizing Trade p. 353
Preserving the Environment p. 377
Promoting Democracy p. 399
Conclusion p. 417
Looking Ahead: Culture and Development p. 419
Appendix: Basic Elements of Econometrics p. 443
References p. 457
Index p. 477