| Preface | XIII |
1 | Introduction: The Facts of Economic Growth | 1 |
1.1 | The Data of Growth and Development | 3 |
1.2 | Other "Stylized Facts" | 13 |
1.3 | The Remainder of This Book | 18 |
2 | The Solow Model | 20 |
2.1 | The Basic Solow Model | 22 |
2.1.1 | Solving the Basic Solow Model | 26 |
2.1.2 | The Solow Diagram | 27 |
2.1.3 | Comparative Statics | 30 |
2.1.4 | Properties of the Steady State | 32 |
2.1.5 | Economic Growth in the Simple Model | 34 |
2.2 | Technology and the Solow Model | 36 |
2.2.1 | The Solow Diagram with Technology | 38 |
2.2.2 | Solving for the Steady State | 39 |
2.3 | Evaluating the Solow Model | 43 |
2.4 | Growth Accounting, the Productivity Slowdown, and the New Economy | 45 |
Appendix | Closed-form Solution of the Solow Model | 50 |
| Exercises | 51 |
3 | Empirical Applications of Neoclassical Growth Models | 54 |
3.1 | The Solow Model with Human Capital | 54 |
3.2 | Convrgence and Explaining Differences in Growth Rates | 63 |
3.3 | The Evolution of the Income Distribution | 71 |
| Exercises | 75 |
4 | The Economics of Ideas | 78 |
4.1 | What is Technology? | 79 |
4.2 | The Economics of Ideas | 80 |
4.3 | Intellectual Property Rights and the Industrial Revolution | 86 |
4.4 | Data on Ideas | 91 |
4.5 | Summary | 94 |
| Exercises | 94 |
5 | The Engine of Growth | 96 |
5.1 | The Basic Elements of the Model | 97 |
5.1.1 | Growth in the Romer Model | 101 |
5.1.2 | Growth Effects versus Level Effects | 106 |
5.1.3 | Comparative Statics: A Permanent Increase in the R&D Share | 106 |
5.2 | The Economics of the Model | 110 |
5.2.1 | The Final-Goods Sector | 111 |
5.2.2 | The Intermediate-Goods Sector | 113 |
5.2.3 | The Research Sector | 115 |
5.2.4 | Solving the Model | 116 |
5.3 | Optimal R&D | 118 |
5.4 | Summary | 120 |
Appendix | Solving for the R&D Share | 122 |
| Exercises | 123 |
6 | A Simple Model of Growth and Development | 124 |
6.1 | The Basic Model | 124 |
6.2 | Steady-State Analysis | 127 |
6.3 | Technology Transfer | 131 |
6.4 | Understanding Differences in Growth Rates | 132 |
| Exercises | 134 |
7 | Social Infrastructure and Long-run Economic Performance | 136 |
7.1 | A Business Investment Problem | 137 |
7.2 | Determinants of F | 138 |
7.3 | Determinants of II | 140 |
7.4 | Which Investments to Make? | 142 |
7.5 | Empirical Evidence | 143 |
7.6 | The Choice of Social Infrastructure | 147 |
7.7 | Growth Miracles and Disasters | 149 |
7.8 | Summary | 153 |
| Exercises | 154 |
8 | Alternative Theories of Endogenous Growth | 156 |
8.1 | A Simple Endogenous Growth Model: The "AK" Model | 157 |
8.2 | Intuition and other Growth Models | 160 |
8.3 | Externalities and AK Models | 161 |
8.4 | Evaluating Endogenous Growth Models | 164 |
8.5 | What Is Endogenous Growth? | 166 |
| Exercises | 167 |
9 | Natural Resources and Economic Growth | 169 |
9.1 | Land in the Solow Model | 170 |
9.2 | Nonrenewable Resources | 173 |
9.2.1 | Setup | 173 |
9.2.2 | The Balanced Growth Path | 176 |
9.3 | Quantifying the Importance of Natural Resources | 178 |
9.4 | Prices As Indicators of Scarcity | 180 |
9.5 | Implications and Explanations of Declining Factor Shares | 185 |
9.6 | Summary | 189 |
| Exercises | 190 |
10 | Understanding Economic Growth | 193 |
10.1 | Why Are We So Rich and They So Poor? | 194 |
10.2 | What Is the Engine of Economic Growth? | 195 |
10.3 | How Do We Understand Growth Miracles? | 195 |
10.4 | Conclusion | 196 |
Appendix A | Mathematical Review | 199 |
A.1 | Derivatives | 199 |
A.1.1 | What Does K Mean? | 199 |
A.1.2 | What Is a Growth Rate? | 200 |
A.1.3 | Growth Rates and Natural Logs | 201 |
A.1.4 | "Take Logs and Derivatives" | 202 |
A.1.5 | Ratios and Growth Rates | 202 |
A.1.6 | [Delta]log versus Percentage Change | 203 |
A.2 | Integration | 204 |
A.2.1 | An Important Rule of Integration | 205 |
A.3 | Simple Differential Equations | 205 |
A.3.1 | Compound Interest | 208 |
A.4 | Maximization of A Function | 209 |
| Exercises | 211 |
Appendix B | Readings of Interest | 213 |
Appendix C | Data on Economic Growth | 215 |
| Bibliography | 221 |
| Index | 227 |