Journal Article

Early progress on the \\"problem of economic development\\"

Abstract: This study describes recent attempts to solve what Lucas has called the \\"problem of economic development\\"?the problem of accounting for the great disparity in per-capita output across countries. The study examines a number of economic development theories, including the neoclassical theory of growth, which relies on cross-country differences in physical capital per person to explain the disparity, and newer theories, which stress cross-country differences in human capital, or education. It is argued that these models cannot account for observed per-capita output diversity. More promising theories are those that stress differences in incentives for entrepreneurs to create businesses (i.e., business capital) and adopt new technologies.

Bibliographic Information

Provider: Federal Reserve Bank of Minneapolis

Part of Series: Quarterly Review

Publication Date: 1993

Volume: 17

Issue: Spr

Pages: 17-35