Solow’s insights hold invaluable lessons for the Indian economy

livemint.com:

Robert M. Solow, MIT Institute professor emeritus, a path-breaking economist whose work influenced generations of economists, died on 21 December, aged 99. Though popularly known for his characterization of technology and its role in economic growth, Solow’s profound influence on research in economics spanned numerous sets of issues both in macro and microeconomics.

Engaged teaching and collegial collaboration as an ethos in academia owes much to him. Several themes that Solow pioneered during his 74-year association with the MIT’s department of economics are important for India’s economic policy. First, Solow’s 1956 paper, ‘A Contribution to the Theory of Economic Growth,’ modelled how increases in population and capital investment will not sustain economic growth.

Rather, it is technological progress, considered broadly, that largely creates growth. If India is to achieve higher per-capita income by 2047, then substantial emphasis must be placed on accelerating productivity. This matters on three counts: (a) It is the most important way to enhance welfare, (b) it is the only possible generator of growth once labour and capital factor accumulation hits a plateau; and (c) it is vital for maintaining and enhancing international competitiveness.