Accumulation of knowledge and increasing returns in neoclassical models



In the mid 1980s there was a remarkable revival of interest in growth theory. A relevant strand of new literature is characterized by the departure from the assumption of diminishing returns of capital or, more generally, of the accumulated factor.

In this paper we will see how the neoclassical theorists incorporated the idea of increasing returns in the formal models of economic growth, already an important question in the sixties. The central point is that the recent recognition of the importance of this notion is not new but now depends on the vision of economic growth as driven by knowledge accumulation and no longer by capital accumulation as in the Solovian tradition.


theory of growth neoclassical economics technological change 


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© Springer-Verlag 2006

Authors and Affiliations

  1. 1.Department of EconomicsUniversity of PaduaPaduaItaly

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