Models of Economic Growth, Institutional Differences and Socio-economic Costs of Development
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In this chapter a distinction has been drawn between neoclassical growth theory and endogenous growth theory. The latter seems sufficient to describe how economic growth in China may occur. In this regard, endogenous growth theory allows for an explanation of the importance of human capital to economic growth through innovation. It has also been established that as part of the economic reforms, the Chinese government initiated specific reforms to horizontally integrate R&D related activities in two stages; and thus, facilitate the commercialisation of knowledge creation. Institutional development in China has been more flexible, consistent and robust in contrast to India; and this may help explain why China’s economic reforms have been more successful than those of India. However, China has incurred socioeconomic costs of development, especially those associated with its one-child policy and pollution.
KeywordsEndogenous Growth Theory Absorptive capacityAbsorptive Capacity Knowledge creationKnowledge Creation Human capitalHuman Capital Economic growthEconomic Growth
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