Robert Lucas once remarked that “once one starts to think about [economic growth] it is difficult to think about anything else” and, indeed, given the importance of growth, one can see his point. Yet, even now there is much that is not known about why growth rates differ. It is now over sixty years since Solow put forward his famous growth model, which still remains the standard exposition of growth in introductory macroeconomics textbooks.

But the explanation that productivity growth is determined by the exogenous, or unexplained, rate of technical progress is hardly satisfactory. The development in the 1980s of endogenous growth theory is that the rate of technical change is simply rebranded as “ideas”. The production of these ideas is explained simply in terms of expenditures on R&D or in externalities in production that banish diminishing returns to capital.