The postwar growth slowdown and the path of economic development

Although the persistent slowdown in the growth of per capita output has been observed in virtually all industrialized countries since the early 1970s, no persuasive theoretical explanation for this phenomenon has been given. This paper constructs a modified endogenous growth model that indicates the slowdown is part of the natural process of economic development. Specifically, the model predicts that each economy develops along a path characterized by Malthusian stagnation, economic take-off, demographic transition, growth slowdown, and steady-state. The persistent slowdown in growth indicates that even the most developed countries are not in their steady-state yet, and their future growth could be slower