ECN 101 Lecture Notes - Lecture 29: Robert Lucas Jr., Paul Romer, Joseph Schumpeter
Document Summary
The modern conception of economic growth began with the critique of mercantilism, especially by the physiocrats and with the scottish enlightenment thinkers such as david hume and adam smith, and the foundation of the discipline of modern political economy. The theory of the physiocrats was that productive capacity, itself, allowed for growth, and the improving and increasing capital to allow that capacity was "the wealth of nations". Whereas they stressed the importance of agriculture and saw urban industry as "sterile", smith extended the notion that manufacturing was central to the entire economy. David ricardo argued that trade was a benefit to a country, because if one could buy a good more cheaply from abroad, it meant that there was more profitable work to be done here. This theory of "comparative advantage" would be the central basis for arguments in favor of free trade as an essential component of growth.
