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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
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.
- Fall '09