Growth theory and application : the case of South Africa

Abstract

This essay is a comparison study of traditional Neoclassical growth theory and new growth theory. It also discusses growth theory in the real world by investigating the so called “growth miracles” and “growth disasters” scenarios in the developing world. Finally, the essay performs a standard growth accounting exercise on South African economy mainly focuses on the importance of human capital in growth process. Growth accounting exercise shows that South Africa experiences a capital-accumulated growth in the 1970s and 80s, while sharply shifts to technology-accumulated growth in the 1990s and early 2000s.