Solow’s Return: Inventions, Ideas, and the Quality of Life

February 27, 2011

Robert Solow’s model of exogenous growth driven by the global diffusion of technology is out of fashion because it ill fits the empirical evidence. Today, economic growth is considered endogenous, and institutions are seen as central to the long-term growth process. An increasing body of literature suggests institutions both have deep historical roots and are difficult to change. At the same time, non-income measures of quality of life, including health and education, do see strong patterns of global growth and convergence. This suggests institutions may be less important to progress in broader quality of life, with a larger role for the factors that drive endogenous change. There has been a rapid global diffusion of “invented” technologies and ideas central to the quality of life from vaccines and oral rehydration therapies to ideas of hygiene and the importance of education. This suggests governments and donors alike should give greater attention to supporting the development and diffusion of technology while creating the demand for the services which underpin the quality of life.

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