Adam Smith: The Inspirer of Modern Growth Theories

Abstract

In economics, one of the most important subjects is to increase economic growth and welfare of society. As one of the most important political economists, Adam Smith analysed the dynamics of wealth of nations and welfare of individuals and societies. In this study, we mainly focused Smith's views on the determinants of economic growth. It is clear that modern economic growth theory has been still benefited from the Smith's views on the economic growth which are division of labour, education, human capital, learning by doing, increasing returns to scale, technological change, externalities, institutional factors such as global free-competitive market economy, the role of government etc. Even if we are not on the same wave with Smith, it is still very important to review Smith's views on the determinants of economic growth in order to design better economic and political environment for economic agents to increase wealth of nations.