Selected Economic Papers
The Cournot Centre series
Edited by Jean-Philippe Touffut
Robert M. Solow It is not certain that faster, stabler economic growth is the key to all the other preoccupations of economic policy. But nearly everyone thinks it is; and we can agree that strong economic growth cannot be a disadvantage. Even issues having to do with the inequality of income and wealth, though not automatically solved by economic growth, are thought to be easier to deal with when ‘a rising tide is lifting all the boats’. It is also universally believed, probably rightly, that innovation – both technological and organizational – is the key to faster growth for modern industrial economies. So it is natural that the first two conferences of The Saint-Gobain Centre should have been devoted to the conditions of European growth, and the institutional prerequisites for fast and successful innovation. This volume includes a number of the papers presented at these conferences. I have already, in these two harmless paragraphs, exemplified what seems to me to be a bad habit. Economists and the broader community interested in these questions tend to speak vaguely of ‘faster growth’ when they mean, or ought to mean, something different. The theory of economic growth teaches the importance of distinguishing between the long-term sustainable rate of growth (the ‘steady-state’ growth rate of output or output per person) and the level of the growth path itself. It is much harder and more problematic to achieve a faster long-term growth rate than to raise the level of output all along the long-term growth path. Two...