Theories of technical change and investment

by Chidem Kurdas

What makes the wealth of nations grow? As Adam Smith knew, and as modern economists have learnt, a large contribution comes from technical change. Yet, there is no satisfactory treatment of the interactive relationship between the two main sources of growth, namely capital accumulation and innovation. This book discusses and evaluates the explanations offered by four main approaches - classical, Keynesian, neoclassical, institutionalist - from the vantage point of how economic agents' behaviour is specified. What type of behaviour makes for successful innovation rather than organizational and technological stasis? What is involved in the rational calculation behind the decision to invest and innovate? The comparison of the different answers given to this question, from the early classics to recent new classical and new institutionalist models, is both vigorous and accessible. This book will be extremely useful to anybody who wants to understand economic growth.