The Network Origins of Economic Growth

Abstract

How do ideas and innovations ‘take root’ and spread? This paper extends traditional endogenous growth theory by incorporating network theory to model how differences in network structure affect the propagation of productive ideas, which in turn affect economic growth. The structure of networks is generated by underlying institutions and in turn affects the propagation of ideas. We extend and apply this model to test McCloskey’s thesis about the role of (bourgeois) ideas and ‘talk’ in economic history by examining their effects on network structure.

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