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The Past and Future of Economic Growth: A Semi-Endogenous Perspective

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  • Charles I. Jones

    (Graduate School of Business, Stanford University, Stanford, California, USA)

Abstract

The nonrivalry of ideas gives rise to increasing returns, a fact celebrated in Paul Romer's recent Nobel Prize. An implication is that the long-run rate of economic growth is the product of the degree of increasing returns and the growth rate of research effort; this is the essence of semi-endogenous growth theory. This review interprets past and future growth from a semi-endogenous perspective. For 50+ years, US growth has substantially exceeded its long-run rate because of rising educational attainment, declining misallocation, and rising (global) research intensity, implying that frontier growth could slow markedly in the future. Other forces push in the opposite direction. First is the prospect of “finding new Einsteins”: How many talented researchers have we missed historically because of the underdevelopment of China and India and because of barriers that discouraged women inventors? Second is the longer-term prospect that artificial intelligence could augment or even replace people as researchers. Throughout, the review highlights many opportunities for further research.

Suggested Citation

  • Charles I. Jones, 2022. "The Past and Future of Economic Growth: A Semi-Endogenous Perspective," Annual Review of Economics, Annual Reviews, vol. 14(1), pages 125-152, August.
    • Handle: RePEc:anr:reveco:v:14:y:2022:p:125-152
    DOI: 10.1146/annurev-economics-080521-012458
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    Cited by:

    1. Dinopoulos, Elias & Grieben, Wolf-Heimo & Şener, Fuat, 2023. "A Policy Conundrum: Schumpeterian Growth or Job Creation?," Economic Modelling, Elsevier, vol. 126(C).
    2. Elias Dinopoulos & Constantinos Syropoulos & Theofanis Tsoulouhas, 2023. "Global Innovation Contests," Games, MDPI, vol. 14(1), pages 1-24, February.
    3. Garibaldi, Pietro & Turri, Enrico D., 2024. "Monopsony in Growth Theory," IZA Discussion Papers 17392, Institute of Labor Economics (IZA).
    4. Wang, Shanchao & Alston, Julian M. & Pardey, Philip G., 2023. "R&D Lags in Economic Models," Staff Papers 330085, University of Minnesota, Department of Applied Economics.
    5. Damioli, Giacomo & Van Roy, Vincent & Vertesy, Daniel & Vivarelli, Marco, 2024. "AI as a new emerging technological paradigm: evidence from global patenting," GLO Discussion Paper Series 1467, Global Labor Organization (GLO).
    6. Johannes Schünemann & Holger Strulik & Timo Trimborn, 2023. "Anticipation of Future Consumption, Excessive Savings, and Long-Run Growth," Economics Working Papers 2023-10, Department of Economics and Business Economics, Aarhus University.
    7. Nicolas Crouzet & Janice C. Eberly & Andrea L. Eisfeldt & Dimitris Papanikolaou, 2022. "The Economics of Intangible Capital," Journal of Economic Perspectives, American Economic Association, vol. 36(3), pages 29-52, Summer.
    8. Caleb Peppiatt, 2024. "The Future of Work: Inequality, Artificial Intelligence, and What Can Be Done About It. A Literature Review," Papers 2408.13300, arXiv.org.
    9. Almeida, Derick & Naudé, Wim & Sequeira, Tiago Neves, 2024. "Artificial Intelligence and the Discovery of New Ideas: Is an Economic Growth Explosion Imminent?," IZA Discussion Papers 16766, Institute of Labor Economics (IZA).
    10. Pfeiffer, Philipp & Varga, Janos & in 't Veld, Jan, 2024. "Unleashing potential: Model-based reform benchmarking for EU Member States," European Journal of Political Economy, Elsevier, vol. 83(C).
    11. Gehr, Katja & Pflüger, Michael P., 2023. "The Worth of Cities in Germany," IZA Discussion Papers 16127, Institute of Labor Economics (IZA).
    12. Kyle R. Myers & Wei Yang Tham & Jerry Thursby & Marie Thursby & Nina Cohodes & Karim Lakhani & Rachel Mural & Yilun Xu, 2023. "New Facts and Data about Professors and their Research," Papers 2312.01442, arXiv.org.
    13. Gomes Orlando, 2024. "Economic Growth in the Age of Ubiquitous Threats: How Global Risks are Reshaping Growth Theory," Economics - The Open-Access, Open-Assessment Journal, De Gruyter, vol. 18(1), pages 1-15, January.
    14. Gilad Sorek, 2024. "Schumpeterian Growth with Variable Demand Elasticity," Auburn Economics Working Paper Series auwp2024-04, Department of Economics, Auburn University.
    15. Röser, Florian & Niemann, Stefan & Angelini, Daniele, 2023. "Fiscal Policy and Human Capital in the Race Against the Machine," VfS Annual Conference 2023 (Regensburg): Growth and the "sociale Frage" 277672, Verein für Socialpolitik / German Economic Association.
    16. Damioli, Giacomo & Van Roy, Vincent & Vertesy, Daniel & Vivarelli, Marco, 2024. "Is Artificial Intelligence Generating a New Paradigm? Evidence from the Emerging Phase," IZA Discussion Papers 17183, Institute of Labor Economics (IZA).
    17. John G. Fernald & Huiyu Li, 2022. "The Impact of COVID on Productivity and Potential Output," Working Paper Series 2022-19, Federal Reserve Bank of San Francisco.
    18. Gries, Thomas & Fritz, Marlon & Wiechers, Lukas, 2023. "Growth with Mismatch - Theory and Evidence from TFP Estimates," VfS Annual Conference 2023 (Regensburg): Growth and the "sociale Frage" 277660, Verein für Socialpolitik / German Economic Association.
    19. Deng, Zhongqi & Song, Shunfeng & Jiang, Nan & Pang, Ruizhi, 2023. "Sustainable development in China? A nonparametric decomposition of economic growth," China Economic Review, Elsevier, vol. 81(C).
    20. Carlos Esteban Posada Posada, 2021. "Could the Colombian economy grow faster? How it would be possible?," Documentos de Trabajo de Valor Público 19683, Universidad EAFIT.
    21. Jakub Growiec & Peter McAdam & Jakub Mućk, 2022. "Are Ideas Really Getting Harder To Find? R&D Capital and the Idea Production Function," KAE Working Papers 2022-071, Warsaw School of Economics, Collegium of Economic Analysis.
    22. Bart van Ark & Dirk Pilat & Klaas de Vries, 2023. "Are Pro-Productivity Policies Fit for Purpose? Productivity Drivers and Policies in G-20 Economies," Working Papers 038, The Productivity Institute.
    23. Doyle, Matthew & Skuterud, Mikal & Worswick, Christopher, 2023. "The economics of Canadian immigration levels," CLEF Working Paper Series 58, Canadian Labour Economics Forum (CLEF), University of Waterloo.
    24. Janice C. dup Eberly & John dup Fernald, 2022. "Jackson Hole 2022 - Reassessing Economic Constraints: Potential Output (The Impact of COVID on Productivity and Potential Output)," Proceedings - Economic Policy Symposium - Jackson Hole, Federal Reserve Bank of Kansas City, August.

    More about this item

    Keywords

    economic growth; ideas; population; innovation;
    All these keywords.

    JEL classification:

    • J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends, Macroeconomic Effects, and Forecasts
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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