This document synthesizes the core concepts, models, and arguments presented in the textbook Introduction to Modern Economic Growth. The text serves a dual purpose: first, as a comprehensive graduate-level treatment of modern economic growth theory, and second, as an introduction to the core of modern macroeconomics. It systematically builds from foundational models to the frontiers of research, grounding theoretical explorations in empirical facts and historical context.

The central thesis of the work is that while the accumulation of physical capital, human capital, and technology are the proximate causes of economic growth, a deeper understanding requires an analysis of the fundamental causes—luck, geography, culture, and institutions—that determine why some societies succeed in these areas while others fail. Through extensive empirical evidence and theoretical modeling, the text argues that institutions, which shape the economic incentives for investment and innovation, are the most significant fundamental cause of long-run growth and cross-country income disparities.

The analysis is built around a series of “workhorse models” of dynamic macroeconomic analysis:

• The Solow Growth Model: Establishes the core mechanics of capital accumulation and demonstrates that sustained per-capita growth requires exogenous technological progress.
• The Neoclassical (Ramsey) Growth Model: Endogenizes savings decisions through intertemporal utility maximization by a representative household, providing microfoundations for accumulation but retaining the necessity of exogenous technology for long-run growth.
• Overlapping Generations (OLG) Models: Introduce finite lifetimes and the continuous arrival of new agents, leading to distinct outcomes such as the possibility of “dynamic inefficiency” (overaccumulation of capital) and a potential role for unfunded social security systems.
• Endogenous Growth Models: Move beyond exogenous technological progress by modeling the economic incentives that drive innovation. These models are categorized into:
  • Expanding Variety Models: Growth is driven by the invention of new types of intermediate goods or products, linked to the non-rivalry of ideas and ex-post monopoly power.
  • Competitive Innovation (Schumpeterian) Models: Growth occurs via “creative destruction,” where higher-quality products replace older ones, creating conflict between incumbent firms and new entrants.
  • Directed Technological Change Models: The direction of innovation is endogenous, explaining phenomena such as skill-biased technological change as a response to the growing supply of skilled labor.

Ultimately, the text provides a rigorous and exhaustive framework for understanding that the mechanics of growth—investment, education, and R&D—are not causes in themselves, but are the outcomes of the fundamental institutional and political-economic environment of a society.