The Mystery Of Economic Growth By Elhanan Helpman

711 Words3 Pages
“In 2010, the prestigious Nemmers Prize in Economics, awarded biennially to recognize work of lasting significance, was given to Helpman for fundamental contributions to the understanding of modern international economics and the effects of political institutions on trade policy and economic growth” (Clement, 2012). “The Mystery of Economic Growth” that was written by Elhanan Helpman provides a non-technical description of growth economics over the last half of a century. This paper will connect theory to data of four major countries United States, French, Australia, and Japan. The principle that emerges from “The Mystery of Economic Growth” is that long term growth comes from innovation and adoption of technology in an economy. Four…show more content…
While growth rates of GDP per capita vary, it is not always the poorest countries that seem to see the highest growth rates. The differences in GDP per capita are greater today than any other time in the world’s history. These differences were relatively small before the early nineteenth century when the gap became more divergent during the Industrial Revolution (Parker, 2013). Living standards in many of the poorer countries are from prolonged but small changes. “The Mystery of Economic Growth” starts by showing the divergence of countries by show casing growth rates and living standards differences in courtliness during the post-World War II era. The book presents the Solow (1956, 1957) model to introduce the insights of the effects of growth of capital accumulation. The results from this lead to the question of “what are the forces of divergence in the world economy” (Helpman, 2010: 15). One can predict from the Solow model is economies will converge. For this model to hold and be true this must be true in every situation. The world economies accelerated growth rate cannot be explained by the forces of accumulation described by the Solow model which would predict a convergence and a declining growth rate. The limitation of this model is that it assumes that all countries have the same technological progress. To help expand the model with the concept of accelerated growth, technical innovation must
Open Document