Document Type

Article

Publication Date

Fall 2006

Publication Title

Journal of Private Enterprise

Volume

22

Issue

1

First Page

120

Last Page

146

Abstract

Thoughtful scholars from Adam Smith to Jared Diamond, have asked the same life-and-death question: why do some societies succeed, and others fail, in producing the goods that make life long, healthy and prosperous? Smith's answer was basically that when societies adopt the rules of market capitalism, their economies grow,:and when they do not adopt the rules of market capitalism, their economies do not. Since Smith, other economists have developed more formal models of economic growth. The classic "Solow growth model" emphasized the investment of capital. Romer's "New Growth Theory," includes knowledge as a variable. What is mainly missing from both the new and the old growth theories is a useful discussion of incentives and entrepreneurship.

Comments

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