Endogenous Growth Theory
710 pp., 7 x 10 in,
- Published: December 24, 1997
- Published: December 24, 1997
Whereas other books on endogenous growth stress a particular aspect, such as trade or convergence, this book provides a comprehensive survey of the theoretical and empirical debates raised by modern growth theory.
Advanced economies have experienced a tremendous increase in material well- being since the industrial revolution. Modern innovations such as personal computers, laser surgery, jet airplanes, and satellite communication have made us rich and transformed the way we live and work. But technological change has also brought with it a variety of social problems. It has been blamed at various times for increasing wage and income inequality, unemployment, obsolescence of physical and human capital, environmental deterioration, and prolonged recessions.
To understand the contradictory effects of technological change on the economy, one must delve into structural details of the innovation process to analyze how laws, institutions, customs, and regulations affect peoples' incentive and ability to create new knowledge and profit from it. To show how this can be done, Philippe Aghion and Peter Howitt make use of Schumpeter's concept of creative destruction, the competitive process whereby entrepreneurs constantly seek new ideas that will render their rivals' ideas obsolete.
Whereas other books on endogenous growth stress a particular aspect, such as trade or convergence, this book provides a comprehensive survey of the theoretical and empirical debates raised by modern growth theory. It develops a powerful engine of analysis that sheds light not only on economic growth per se, but on the many other phenomena that interact with growth, such as inequality, unemployment, capital accumulation, education, competition, natural resources, international trade, economic cycles, and public policy.
The best book so far on capitalism, markets, and growth—both a masterful assimilation of past work from Schumpeter to the 1960s and a guide to the recent work in which Aghion and Howitt are leaders.
Edmund S. Phelps, McVickar Professor of Political Economy, Columbia University
The theory of growth has made a great advance in recent years and Philippe Aghion and Peter W. Howitt have been leading the attack on the fronteirs. They have shown how the analysis of growth should be based on a clear and creative microeconomic understanding of the competitive forces behind innovation and accumulation. This is a most important book which must be read by all those interested in understanding how economis grow.
Professor Nicholas Stern, FBA, Chief Economist, European Bank for Reconstruction and Development
Aghion and Howitt have done a splendid job of integrating the dispersed material constituting what has come to be known as, 'endogenous growth theory.' They have joined aggregate models of the economy with a more detailed treatment of the economies of innovation than has been hitherto available. This synthesis, representing much that is original, will be the basis for rich future developments.
Professor Kenneth J. Arrow, Department of Economics, Stanford University
Everything that has been done in engogenous growth theory up to 1997 will be found in this book. The two authors are much taken by the Schumpeterian theory of creative destruction and have done sterling service in making it more precise and usable. But they do not neglect other theories and, indeed, cast their net widely to include questions of orginization of firms, incentive theory, and employment theory as they fitt into the understanding of growth. Nor are they indifferent to empirical evidence. Much of the analysis is in terms of steady states. One of the notable features of the book is that the limitations of this are fully discussed. Indeed the gap between manageable models and the world modelled is often noted. A spledid book which shows economics at its best.
Frank Hahn, University di Siena
This is not a routine textbook on modern growth theory. Aghion and Howitt take the Schumpeterian point of view seriously, and pursue it in a versatile and open-ended way. They may even do some creative destruction of their own. Anyone reading this book will come away with a lot of new ideas.
Professor Robert M. Solow, Massachusetts Institute of Technology, Department of Economics, Interdepartmental
Aghion and Howitt is a real breakthrough in growth economics. This book has profound implications and should be read by anyone who is serious about studying economic growth.
Nicholas Crafts, Department of Economic History, London School of Economics and Political Science