Knowledge of growth and the growth of knowledge

Abstract

This paper examines the theoretical importance of knowledge and information in the economic growth process and the implications this holds for economic policy. First, the growth viewpoints of the neoclassical, Keynesian, and institutionalist schools are discussed and it is shown that their conflicts can be reconciled in a descriptive sense. A new theory of economic growth is then sketched which is intended to summarise the perspective of the institutionalist school. As such, this theory is based on the costliness of information and knowledge. Finally, it is shown that viewing the link between knowledge and growth in this way has significant implications for issues of science policy, savings policy, the direction of investment, and the structure of institutions and organizations to promote economic growth.