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New Growth Theory definitions

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  • New Growth Theory
    A framework highlighting technology and knowledge as primary drivers of long-term economic expansion, emphasizing innovation over traditional capital.
  • Technology
    Advancements or innovations that boost productivity and enable higher output without increasing traditional inputs.
  • Productivity
    The efficiency with which inputs are transformed into outputs, often enhanced by technological improvements.
  • Knowledge Capital
    The collective stock of information, ideas, and technology available within an economy, distinct from skills or education.
  • Human Capital
    The skills, education, and abilities possessed by individuals, which enhance their capacity to contribute to economic activity.
  • Physical Capital
    Tangible assets like machinery, buildings, and equipment used in production, subject to diminishing returns.
  • Research and Development
    Activities undertaken by firms to innovate, discover new technologies, and expand the pool of knowledge capital.
  • Diminishing Returns
    A phenomenon where each additional unit of input yields progressively smaller increases in output, typical for physical capital.
  • Increasing Returns
    A situation where the benefits from additional input, such as knowledge, grow larger as more is accumulated and shared.
  • Public Good
    A resource that is non-rival and non-excludable, allowing multiple users to benefit without reducing its availability to others.
  • Non-rivalry
    A characteristic where one individual's use of a resource does not diminish its availability for others.
  • Non-excludability
    A feature of resources that cannot be withheld from those who have not paid for them, making exclusion impractical.
  • Patent
    A legal protection granting exclusive rights to an invention for a limited period, typically 20 years, to encourage innovation.
  • Subsidy
    Financial support from the government to encourage activities like research and development or education.
  • Free Riding
    Benefiting from resources, goods, or services without directly contributing to their creation or cost, common with public goods.