Extensive and Intensive Growth in a Neoclassical Framework

Andreas Irmen

No 4266, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: Extensive growth based on the expansion of inputs is likely to be subject to diminishing returns. Therefore it is often viewed as having no effect on per capita magnitudes in the long run. This Paper argues that periods of extensive growth through capital accumulation may be a precursor to periods of intensive growth during which output per unit of input grows through endogenous technical change. Such a sequence of stages of development occurs as capital accumulation affects the incentives to engage in labour-saving technical change. A steady rise in the capital-labour ratio affects the relative scarcity of factors of production, their (expected) relative price, and induces innovation investments.

Keywords: Productivity growth; Endogenous technical change; Neoclassical growth model; induced innovation (search for similar items in EconPapers)
JEL-codes: D24 J30 O33 O41 (search for similar items in EconPapers)
Date: 2004-02
New Economics Papers: this item is included in nep-dev, nep-mac and nep-mic
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Citations: View citations in EconPapers (4)

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Journal Article: Extensive and intensive growth in a neoclassical framework (2005)
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