Non-scale endogenous growth with R&D and human capital

This paper examines the conditions under which increasing knowledge, encapsulated in
ideas for new technology through R&D and embodied in human capital through
education, sustains economic growth. We develop a general model where, consistent
with recent literature, growth is non-scale (not increasing in population size) and
endogenous (generated by factors within R&D and education). Recent models feature
the counterfactual assumption of constant returns to existing knowledge and restrict the
substitutability of inputs within R&D and education. We find that non-scale endogenous
growth is possible under less stringent conditions. Our findings reconcile sustained
economic growth with evidence of diminishing marginal returns in education and R&D,
which suggests an ambiguous role for R&D policy.