economics//economic growth

Economic growth is the increase over time in the output an economy produces, and growth theory explains it by how labour, capital and ideas accumulate and combine. Over long periods, growth in output per person comes mostly from ideas (better methods, designs and technology), because capital alone runs into diminishing returns: each extra machine adds less than the one before.

Economic growth is the increase over time in the output an economy produces, and growth theory explains it by how labour, capital and ideas accumulate and combine. Over long periods, growth in output per person comes mostly from ideas (better methods, designs and technology), because capital alone runs into diminishing returns: each extra machine adds less than the one before.

Growth models that make ideas the product of research write an idea production function, which says how fast research effort turns into new technology.

In semi-endogenous growth ideas get harder to find, so steady growth needs a growing research effort. That assumption is what an AI that does research itself would change.

When productivity grows in some sectors and not others, the slow ones take a growing share of cost (Baumol effect).

How inputs combine is the subject of the production function.