Macro Innovation Dynamics and the Golden Age

New Insights into Schumpeterian Dynamics, Inequality and Economic Growth

  • Paul J. J. Welfens

About this book


This book takes a new look at the golden age in neoclassical growth theory and explores in detail sustainability and optimum growth in China, the US and Europe. Innovation, foreign direct investment, trade and growth dynamics are key elements in modern economies – including perspectives on green growth and aspects of the knowledge production function in the context of multinational companies. As such the book considers the role of foreign direct investment in a modified growth model and discusses innovation in an enhanced Mundell-Fleming macro model. Moreover, for the first time it directly links a knowledge production function to the macro production function in a broader context, including real money balances in the production function. It shows – also with empirical relevance – that FDI inward stocks relative to the GDP of host countries, the number of researchers and per capita income are relevant drivers of new knowledge and the stock of knowledge, respectively. This new Schumpeterian theoretical approach lends itself to important policy conclusions for both OECD members and newly industrialized countries.


Macroeconomics Schumpeterian Economics Golden Rule Foreign Direct Investment Multinational Companies Knowlege Production Neoclassical Growth Theory Green Growth Sustainability China OECD New Industrializing Countries

Authors and affiliations

  • Paul J. J. Welfens
    • 1
  1. 1.Jean Monnet Chair for European Economic Integration and Chair for MacroeconomicsPresident of European Institute for International Economic Relations (EIIW) at the University of WuppertalWuppertalGermany

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