Economics · Growth and Development
Paul Romer's endogenous growth model implies that social returns to capital exceed private returns because:
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Labor productivity is entirely dependent on physical capital accumulation.
- 2Investment in physical capital automatically eliminates the need for human capital development.
- 3Capital owners voluntarily share their financial gains with the broader society.
- 4The knowledge created by new investments generates positive spillovers shared by other firms.✓
Correct answer
The knowledge created by new investments generates positive spillovers shared by other firms.
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