This comprehensive introduction to economic growth presents the main facts and puzzles about growth, proposes simple methods and models needed to explain these facts, acquaints the reader with the most recent theoretical and empirical developments and provides tools with which to analyze policy design. The book can be used by postgraduate students of Economics and as a reference for professional economists in government or international financial organizations. “Aghion and Howitt’s work on growth and policy has vastly increased our understanding of endogenous incentives and supportive policies that drive growth in advanced and developing countries. In this important book, they bring their own insights and the insights of other pioneers to bear on the broader context of growth. This book is accessible, fascinating and extremely useful.” Michael Spence Professor Emeritus, Stanford University and Winner of the 2001 Nobel Prize in Economics “Aghion and Howitt have produced a very important and thoughtful book which presents questions, models and answers in a clear and constructive manner. They show how good theory can and should influence both understanding and policy.

Table of Contents:Preface. Introduction. Part I: Basic Paradigms of Growth Theory 1. Neoclassical Growth Theory 2. The AK Model 3. Product Variety 4. The Schumpeterian Model 5. Capital, Innovation and Growth Accounting Part II: Understanding the Growth Process 6. Finance and Growth 7. Technology Transfer and Cross-Country Convergence 8. Market Size and Directed Technical Change 9. General-Purpose Technologies 10. Stages of Growth 11. Institutions and Nonconvergence Traps Part III: Growth Policy 12. Fostering Competition and Entry 13. Investing in Education 14. Reducing Volatility and Risk 15. Liberalizing Trade 16. Preserving the Environment 17. Promoting Democracy Conclusion 17. Looking Ahead: Culture and Development Appendix: Basic Elements of Econometrics References. Index