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The Internal Mechanism of Innovation and Division of Labor to Promote Economic Growth —— comments on the division models of Romer and Yang Xiaokai |
ZHAO Jian |
China Urbanization Research Center , Beijing Jiaotong University, Beijing 100044,China |
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Abstract The economics literature typically examines the roles of innovation and division of labor in economic growth separately, but there is a close logical connection between innovation and division of labor (Young’s progressive division of labor among industries in particular). Based on the analysis of the logical connection between Schumpeter’s innovation and Young’s division of labor among industries, this paper shows that Romer vaguely links innovation and division of labor based on Young’s thought in his endogenous growth model to explain increasing returns. Romer’s model decomposes capital into a series of producer durables, therefore, the microeconomic mechanism for economic growth can be explained by the progressive division of labor among industries caused by new product innovation. Yang Xiaokai paid more attention to explaining economic growth by mathematizing Smith’s concept of division of labor, but failed to fully understand the important role of innovation and progressive division of labor among industries for increasing returns. Both models face the predicament of using mathematical models to explain the complex economic mechanisms, and are unable to thoroughly reveal the internal mechanism of innovation and division of labor in promoting economic growth, whereas the newly developed new evolutionary economics can give a better explanation.
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Received: 28 November 2022
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