Article Review And Summary

Surname 1

Name

Tutor

Course

Date

Econ 6306

This paper provides a review and summary of the article, ‘A Contribution to the

Economics of Growth,’ by Mankiw, Romer, and Weil. The paper provides the main findings as

presented in the article. The paper also determines the unique contributions made by the article to

the field of economic growth, as well as its main arguments.

Summary

The article suggests that Robert Solow should be taken seriously following his arguments

in the classic report of 1956. Solow argued that the economic growth should support a standard

function of neoclassical production that is augmented with a decreasing return on capital. He

explained that this is the basis for understanding the economics of growth. Solow illustrated how

the variables determine the steady level of state income per capita. While showing this, Solow

assumed that the rates of population growth and saving are both exogenous and therefore, not

relevant to the production function. He also considered the rate at which countries reach a steady

level of income. Furthermore, countries attain the constant state at different times, as the saving

and population growth rates continually vary from one country to another.

In this article, Robert Solow gave a simple economic growth model that can be used to

test and predict how population growth as well saving rates influence every country’s steady

level of income. According to this model, as explained by Arcand, increases in the proportion of

saving increase the country’s level of income (34). Thus, states with higher rates of saving

Surname 2

become richer compared to those with low rates of saving. On the other hand, population growth

rate has an inverse effect on a country’s income level. High population growth rates increase the

level of poverty in a country. As illustrated by Solow, these two major factors determine the

level of steady-state income of a nation.

The article by Mankiw, Romer, and Weil observe that Solow made exceptional

contributions to the study of the economics of growth by identifying two major factors that

directly affect the country’s level of income. No economist has disputed these two elements

since the publication of Solow’s article in 1956. The report discovered that the predictions of

Robert Solow in his model consist with the evidence provided. Nallari and Griffith examined

recently available data from several countries and concluded that the saving and population

growth rates directly affect the level of a country’s income per capita (65). The available

empirical evidence also reveals that the two factors affect national income level in the direction

predicted by Solow in 1956. Moreover, more than a half of the variations in a country’s income

per capita can be explained using Solow’s model by only two factors: population growth and

saving.

Besides, the article augments Solow’s model with physical capital and human capital

accumulation (Mankiw, Romer, and Weil 408). This is done to predict the magnitude of

influence in the steady-state national income level. As noted by Arcand’s article, the only

weakness in Solow’s model is that it does not predict the magnitudes of influence (89). The

article further explains that the effects of saving as well as population growth rate appear too

large in the Solow’s model because human capital was excluded from the model. To understand

the impact of the growth of population correctly and saving standards, human capital and

physical capital must be included in the model.

Surname 3

According to the explanation provided the article, lower population rate or higher saving

rate leads to higher level of steady-state income and subsequently, a high human capital

(Mankiw, Romer, and Weil 408). With this argument, both population growth and accumulation

of physical capital have the enormous impacts on steady-state income level. Therefore, the

accumulation of human capital must be taken into account when explaining the economics of

growth. In particular, the article suggests that human capital accumulation correlates with both

rates at which population and saving are growing. According to Scarth, this correlation implies

that omission of human capital accumulation creates a substantial bias in the estimation and

prediction of steady-state income (45). Furthermore, it creates bias in the evaluation of the

coefficients of population growth and saving. The pivotal change the authors make to Solow’s

model is the introduction of physical capital and humans capital accumulation as a measure of

magnitudes.

Review

The authors presented substantial evidence to their new model. First, they used empirical

data from several countries to show that in the Solow’s model, the effects appear too significant

because it did not consider the magnitudes. In particular, the results were reduced to manageable

levels after introducing physical capital and human capital accumulation as a measure of sizes.

Furthermore, as explained by Acemoglu, it is now easy to estimate the coefficient of population

growth and coefficient of saving rate after augmenting sorrow’s model unlike in its former state

(65) accurately. The new model has been found to be accurate as compared to the Solow’s

model. Precisely, it accurately measures the magnitude of influences. It also correctly estimates

the coefficients of saving and growth rate, which were lacking in the Solow’s model. Also, the

new growth model is consistent with the variation in the international standards of living. In

Surname 4

essence, it shows that the augmented Solow’s model provides an excellent description of cross-

country data.

The authors also examined convergences after developing and testing the new economic

growth model. In particular, they studied the failure of the countries to converge in their income

per capita. This issue has brought several controversies over the years. The authors strongly

argue that convergence in a country’s income per capita should not be anticipated. They used

many reasons to support this claim. First, according to Solow’s model, countries reach different

steady states at different times. With this argument, it is impossible to analyze the income per

capita of various nations. The authors also examined empirical data from a set of states that have

shown non-convergence of income and found the same results. They discovered that

convergence could be concluded only if the disparity between savings and population growth are

accounted for (Mankiw, Romer, and Weil 428).

It is important to note that the sample used in the evaluation matters because the

coefficients of saving as well as population growth rates vary from one country to another. As

explained in the article by Mankiw, Romer, and Weil, comparing data from countries with

different economic conditions always creates bias. The evidence provided for the augmented

Solow’s model contrasts with the endogenous growth. Consequently, the article presents a

detailed and evidence-based narrative of the primary drivers of economic growth in any given

country. Besides Solow’s population growth and saving, the enhanced Solow’s model

demonstrates a need to consider human accumulation and capital regarding physical resources.

Surname 5

Works Cited

Acemoglu, Daron. Introduction to Modern Economic Growth. Princeton: Princeton University

Press, 2009. Print.

Arcand, Jean-Louis. Undernourishment and Economic Growth: The Efficiency Cost of Hunger.

Rome: FAO, 2001. Print.

Mankiw, N. Gregory, David Romer, and David N. Weil. “A Contribution to the Economics of

Growth,’ The Quarterly Journal of Economics, 107.2 (1992): 407-437. Print.

Nallari, Raj, and Breda Griffith. Understanding Growth and Poverty: Theory, Policy, and

Empirics. Washington, DC: World Bank, 2011. Print.

Scarth, W. Macroeconomics: The Development of Modern Methods for Policy Analysis.

Cheltenham: Edward Elgar Publishing, 2014. Print.

Place new order. It's free, fast and safe

Paper type

Deadline

Page count

550 words

Total price: $ 15.00

Our customers say

Jeff Curtis

USA, Student

"I'm fully satisfied with the essay I've just received. When I read it, I felt like it was exactly what I wanted to say, but couldn’t find the necessary words. Thank you!"

Ian McGregor

UK, Student

"I don’t know what I would do without your assistance! With your help, I met my deadline just in time and the work was very professional. I will be back in several days with another assignment!"

Shannon Williams

Canada, Student

"It was the perfect experience! I enjoyed working with my writer, he delivered my work on time and followed all the guidelines about the referencing and contents."

Article Review and Summary

Place new order. It's free, fast and safe

Our customers say

Jeff Curtis

Ian McGregor

Shannon Williams