Endogenous growth and structural economic dynamics: A comparative analysis

This study provides a deeper investigation into growth theories by comparing Paul Romer’s endogenous growth theory with Luigi Pasinetti’s structural economic dynamics framework. The analysis is primarily theoretical. The methodology is analytical and conceptual, grounded in a comparative theoretical framework. This paper employs a deductive approach to explore the internal consistency and evolutionary trajectories of these two distinct growth paradigms. Using the Solow growth model as a baseline, the paper examines the innovative contributions of Romer and Pasinetti to the field. Although these theories differ methodologically and epistemologically, they share a fundamental emphasis on technical progress, defined as technological knowledge, as the primary driver of economic growth. This study highlights their commonalities, specifically their focus on knowledge, learning, and skills as the core engines of progress, while noting that Pasinetti adopts a more evolutionary perspective. Finally, the paper contrasts their specific analytical toolkits: Romer’s reliance on the aggregate production function and the rational expectations hypothesis versus Pasinetti’s utilization of input-output analysis, vertically integrated sectors, and the "natural system" of production. The paper aims to provide new insights for future research, contributing to the debate regarding alternative approaches to growth theory.