R&D-Based, Human Capital- Based, or Just Steady State Growth?

This paper examines the sources of economic growth in Australia from 1960 to 2000 by adapting and modifying a framework developed in Jones (2002), whereby long-run growth is driven by the global dis-covery of new ideas, which in turn is tied to world population growth. We find that, contrary to the conventional view as suggested by sus-tained growth rates and a stable capital-output ratio over the last sev-eral decades, Australia is clearly not on its steady-state balanced growth path. Australia has benefited from increases in educational attainment and research intensity: 28 percent of Australian growth between 1960 and 2000 is attributable to the rise in educational attainment, about 40 to 60 percent is attributable to increasing research intensity, while only 20 to 30 percent is due to long-run population growth in the idea-producing countries