On Growth in the Intermediate Run

One way to think of economic growth is to view it as an autonomous process, which in spite of some shocks, proceeds at a pace which is pretty much determined by the time preferences of the individuals and their attitude towards risk. The engine of growth is the change in technology and this is determined by the amount of resources that are allocated to activities which change the technology, referred to as human capital (cf. Lucas, 1988). This view of the process yields a consistent paradigm of sustainable growth where there is no need to rely on exogenous technical change. This theory is instructive but in its present form it is insufficient to confront the data and explain crosscountry and within-country differences in the growth rates. Empirical analysis, therefore, has to search for a broader specification.