Economic Growth Overview

Principles

Definition

Economic growth is an academic concept and field of study focused on the sustained increase in the production of goods and services in an economy over time, typically measured by the growth rate of Gross Domestic Product (GDP) or GDP per capita. It investigates the factors driving this increase, such as technological progress, capital accumulation, human capital development, and institutional quality, and analyzes its determinants, patterns, and implications for economic welfare and structural change.

Ontological type

Key Determinants

Major Growth Models

Measurement Indicators

Key developments

Key Figures

Neoclassical Growth Accounting era

Robert M. Solow [1] was a foundational figure in the neoclassical growth accounting tradition of the era, with affiliations at MIT [3] and Princeton University [4] during the 1954–1983 period. Solow [1] helped crystallize the decomposition approach by isolating the contributions of capital accumulation and a productivity residual through A Contribution to the Theory of Economic Growth [7], a framework that underpinned empirical work on saving–investment dynamics and time-to-build investment lags that defined the era. Nicholas Kaldor [2] was associated with Cambridge [5] and the University of KwaZulu-Natal [6] during this era, contributing a growth model that highlighted structural dynamics and distributional aspects of growth in contrast to pure factor accumulation, as seen in A Model of Economic Growth [8]. Kaldor [2] is frameworked within the Cambridge [5] and KwaZulu-Natal [6] milieu and crystallized in A Model of Economic Growth [8], complementing Solow’s decomposition by foregrounding structural change and investment-led dynamics as essential channels of long-run expansion in the era.

Endogenous Growth Paradigm era

Paul Romer [1] is a central figure in the endogenous growth literature of this era, with affiliations at Stanford University [3] and the University of California, San Diego [4]. His key contributions include the 1986 paper Increasing Returns and Long-Run Growth [7] and the 1988 paper CAPITAL ACCUMULATION IN THE THEORY OF LONG RUN GROWTH [8], both of which articulate how knowledge spillovers and increasing returns can sustain long-run growth, a cornerstone of this era. David Weil [2] is another central figure, with affiliations at Harvard University [5] and Los Angeles Pierce College [6] during this era. His sole listed era paper, A Contribution to the Empirics of Economic Growth [9] (1992), contributed to empirical cross-country growth literature and highlighted the role of data-driven analysis in validating endogenous growth mechanisms.

Institutional Green Growth era

Ross Levine [1], affiliated with Harvard University [3] and Stanford University [4] in this era, is known for exploring how financial development and policy credibility channel investment into growth. His key contributions include panel evidence on stock markets, banks, and growth [6], and work on how endowments influence development [7], both crucial for understanding how financial and institutional channels affect growth and productivity in this era. Andrei Shleifer [2], affiliated with Harvard University [3] and the Massachusetts Institute of Technology [5] in this era, has emphasized the role of institutions in shaping growth. His sole but influential contribution, Do Institutions Cause Growth? [8], argues that formal institutions matter for growth, highlighting why credible governance and institutional quality are central to the institutional-financial pathway to green growth depicted in this era.