ABSTRACT
The previous two chapters deal with issues related to growth with endogenous human capital and knowledge. Although knowledge is not treated as an exogenous variable, these models have a common limitation if one wants to know in the microeconomic level about what are the motives for private companies to make innovation and for individuals to get educated. For instance, in the previous chapter, knowledge stock, Z(t), receives no compensation, and every individual is assumed
to be free to exploit the entire stock of Z(t). Although these models are congruous
with that technological change drives economic growth and the knowledge is a nontrivial good, they don’t explain why profit-maximizing private firms would make efforts to generate technological change.
