Laissez-faire economics failed to deliver economic growth to poor countries
- Market is best allocation mechanism
- Diminishing returns to capital
- Technology was exogenous so in endogenous growth models, technology modelled as non-rivalrous (but partially excludability) therefore not a pure public good.
Solow model & Endogenous growth models
Conditional convergence, assuming diminishing returns to capital, implied poor economies with lower k (=K/L) compared to its long-term steady state will grow faster.
To include technology, endogenous growth theories assumed technology is non-rivalrous but partially excludability however Yifu Lin despite partial excludability, not sufficient to mean the market will provide a socially optimum level. Therefore need government intervention.