The New Palgrave Dictionary of Economics

2018 Edition
| Editors: Macmillan Publishers Ltd

Schumpeterian Growth and Growth Policy Design

  • Philippe Aghion
Reference work entry
DOI: https://doi.org/10.1057/978-1-349-95189-5_2698

Abstract

Schumpeterian growth theory features quality-improving innovations that displace previous technologies, and are motivated by prospective monopoly rents. It predicts, first, that a higher rate of growth should be associated with a higher rate of firm entry and exit, and that exit can enhance productivity growth; second, that some countries may converge to the technological frontier whereas others may diverge; third, that a given policy will have contrasting effects on sectors or countries at different distances from the frontier, and therefore growth policy must be adapted accordingly. In particular, entry and delicensing enhance growth more the closer sectors or countries are to the technological frontier.

Keywords

Capital accumulation Cobb–Douglas functions Competition policy Creative destruction Endogenous growth Entrepreneurs Entry and exit Growth policy design Horizontal innovation model Implementation innovations Industrial organization Information technology and economic growth Innovation Instrumental variables Monopoly rent Product variety Ramsey model Research and development Schumpeterian growth model Technology frontier Total factor productivity Washington consensus 
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Copyright information

© Macmillan Publishers Ltd. 2018

Authors and Affiliations

  • Philippe Aghion
    • 1
  1. 1.