There were two questions in particular which prompted them to move in new directions. The first question was “growth”. These semi-dissident economists wanted to know how emerging economies of the third world could expand more or less continuously, not in cycles and never, ever maturing or declining at least until they had caught up with the developed world. They wanted to offset the likely possibility that an initial growth by one nation (or firm) could be “locked in” or made permanent , preserving indefinitely their initial growth advantage and precluding any possibility of “convergence” over time. If the first economies to grow could lock in its advantage (achieve, in effect a monopoly) that meant the emerging economies could never really hope to ever catch up. To eliminate the threat to economic convergence, growth economists would eventually devise a model which included a set of governmental policy prescriptions. If government enacted these prescriptions, the growth economists suggested, their economy would be transformed into a growth machine which could not only alleviate the late 1970 era disparities between the developed and the developing nations, but could also reduce intra-national inequalities in the allocation of goods and services to their population.

What’s the Theory Behind Innovation and the Knowledge-Based Economy | Journal of Applied Research in Economic Development Saturday, April 26, 2014 @ 1:06pm | Modified