Two Strategies for Economic Development: Using Ideas and Producing Ideas

Abstract

The key step in understanding economic growth is to think carefully about ideas. This requires careful attention to the meaning of the words that we use and to the metaphors that we invoke when we construct mathematical models of growth. After addressing these issues, this paper describes two different ways in which ideas can contribute to economic development. The history of Mauritius shows how a poor economy can benefit by using ideas from industrial countries within its borders. The history of Taiwan (China) shows how a developing economy can be pushed forward into the ranks of those that produce ideas for sale on world markets.