Smithian Growth Theory

Smithian Growth Theory, named after economist Adam Smith, emphasizes the importance of specialization, division of labor, and technological innovation in driving economic growth. It suggests that when individuals and firms focus on producing specific goods or services, they become more efficient, leading to increased productivity. This, combined with improvements in technology, results in higher output and income over time. The theory highlights how free markets and competitive exchange encourage innovation and resource allocation, fostering sustained economic growth and overall prosperity.