Abstract

I develop a growth model with three sectors of production (final goods, intermediate goods, and R&D), each with a different technology using three inputs (labour, capital, and knowledge), and combining elements from three strands of the literature (neo-classical growth, and AK and R&D endogenous growth). The paper suggests not only that capital accumulation and innovation are complementary processes, neither of which would take place in the long run without the other, but also that this process can be self-sustaining either through Hicks-neutral knowledge spillovers without capital accumulation, or through Harrod-neutral knowledge spillovers with capital accumulation.

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