This initiated a period of sustained increases in

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Unformatted text preview: ch as security for trade and investment. This initiated a period of sustained increases in living standards. However, the type of economic growth which took place was on the intensive margin. It involved expanding trade, human and physical capital accumulation, but technology was relatively stagnant. We have known since the work of Robert Solow in the 1950s that modern economic growth is driven by technological change or TFP growth - on the extensive margin. James A. Robinson (Harvard) The Emergence of Modern Economic Growth: A Comparative and Historical Analysis: L September 28, 2009 15 / 25 The Problem with Extensive Growth The problem with growth on the extensive margin is that it is ‘ Schumpetarian’it involves a process of ‘ creative destruction’- new innovations replace old ones and incumbents lose their rents - they are economic losers. Maybe even more important, creative destruction can create political losers - it redistributes political power and destabilizes the political status quo. This means that the losers, if they have su¢...
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This document was uploaded on 02/28/2014 for the course ECON 2328 at Harvard.

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