Ideology, Human Capital, and Growth

We develop an endogenous growth model in which technological progress raises the e±ciency of time allocated to education, and knowledge and ideology play complemen-tary roles in determining individuals ' e±ciency units of labor input. A higher supply of aggregate units of e±ciency labor generates incentives to invent new technologies because it raises the monopoly rents from the introduction of such technologies. We show that economies with initally more \fact-consistent " ideologies are likely to invest more in ed-ucation and as a result experience faster technological progress and growth. Somewhat paradoxically, we also demonstrate that relatively more fact-consistent ideologies are the ones likely to experience weakening support. Adherence to °exible ideologies that evolve over time remains high even in the long run. When there exists a feedback loop between education and ideology, a °awed ideology may be better for growth and development than no ideology. Finally, the frequency with which ideologies are adopted and spread may be decreasing in the sophistication of technology