Solow Growth Model
The Solow Growth Model is an economic theory that explains how a country's economy grows over time. It emphasizes the role of capital accumulation, labor force growth, and technological progress in driving economic output. The model suggests that increases in capital and labor can lead to higher productivity, but diminishing returns will eventually slow growth unless technological advancements occur.
In the Solow Model, long-term economic growth is primarily driven by technological progress, as it allows for sustained increases in productivity. The model also highlights the importance of savings and investment in capital, which can enhance a nation's ability to produce goods and services, ultimately improving living standards.