Some Thoughts on Capital Accumulation, Innovation, and Growth

Philippe Aghion and Peter Howitt

Annals of Economics and Statistics, 2017, issue 125-126, 57-78

Abstract: In this paper we introduce capital accumulation in the Schumpeterian growth framework. A first main result is that capital accumulation and innovation are both essential inputs to long-run growth. More innovation stimulates capital accumulation by raising the marginal product of capital. More capital accumulation stimulates innovation by raising the profits accruing to a successful innovator. This result runs counter to the conventional belief to the effect that innovation alone determines the long-run growth rate while capital accumulation determines only the level of the long-run growth path. In the second part of the paper we discuss the implication of merging capital accumulation and innovation-led growth for growth accounting.

Keywords: Endogenous Growth; Innovations; Creative Destruction (search for similar items in EconPapers)
JEL-codes: D24 O3 (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:adr:anecst:y:2017:i:125-126:p:57-78

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