Quote of the Day: Learning by Doing

[timelets]

I advance the hypothesis here that technical change in general can be ascribed to experience, that it is the very activity of production which gives rise to problems for which favorable responses are selected over time.
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I therefore take instead cumulative gross investment (cumulative production of capital goods) as an index of experience. Each new machine produced and put into use is capable of changing the environment in which production takes place, so that learning is taking p!ace with continually new stimuli. This at least makes plausible the possibility of continued learning in the sense, here, of a steady rate of growth in productivity.

The Economic Implications of Learning by Doing
Author(s): Kenneth J. Arrow
Source: The Review of Economic Studies, Vol. 29, No. 3 (Jun., 1962), pp. 155-173
http://www.jstor.org/stable/2295952

Also see ENDOCENOUS TECHNOLOGICAL CHANGE, by Paul M. Romer.

The distinguishing feature of the technology as an input is that it is neither a conventional good nor a public good; it is a non-rival, partially excludable good.

The main conclusions are that the stock of human capital determines the rate of growth, that too little human capital is devoted to research in equilibrium, that integration into world markets will increase growth rates, and that having a large population is not sufficient to generate growth.