Technology and Development
The significance of technological change to economic growth and development has been verified again and again in empirical studies. The endogenous growth theories considered in Chapter 8 are part of this ever-growing literature. The research based on neoclassical growth models has found that the basic factors of production, capital, and labor cannot explain all, or even much, of economic growth. It is often the “residual,” that is, the unidentified, variables that contribute the most to increased productivity. The non-included variables, which can encompass such diverse items as technology, business and governmental organization, institutional structures, the legal system, property rights, and so on, carry the weight of “explaining” economic growth over time and the differences in growth rates amongst countries.