This book provides the best survey on the theory of innovation and growth, probably the hottest research topic of the last thirty years. It first presents the main growth paradigms: the neoclassical model, the AK model, Romer's product variety model, and the Schumpeterian model. The text then builds on the main paradigms to shed light on the dynamic process of growth and development, discussing such topics as the relation between competition and technological progress, innovation by leaders, club convergence, directed technical change, the transition from Malthusian stagnation to sustained growth, general purpose technologies, and the recent debate over institutions versus human capital as the primary factor in cross-country income differences. Finally, the book focuses on growth policies—analyzing the effects of liberalizing market competition and entry, education policy, trade liberalization, environmental and resource constraints, and stabilization policy—and the methodology of growth policy design.

Praises:

"The Economics of Growth by Philippe Aghion and Peter Howitt is an excellent introduction to the exciting field of economic growth. It will challenge and motivate students and researchers.' Daron Acemoglu, MIT

"A central puzzle of growth theory is to account for sustained productivity increase in the face of diminishing returns. Aghion and Howitt describe, with great clarity and verve, the main explanations that growth theory has proposed: from denial of the reality of diminishing returns to capital to Schumpeterian creative destruction, with intervening stops for exogenous and endogenous technological progress. An industrious reader can end up poised at the current analytical frontier, prepared to think about open questions and new issues.' Robert Solow, MIT

"A fascinating tour through the frontier research on economic growth with a key question: 'Which policies and institutions promote and which hinder the transition from poverty to prosperity?' The authors do not believe in one-size-fits-all recipes, and take the complexity of economic development into modern growth theory.' Fabrizio Zilibotti, University of Zurich