Solow Growth Model

The Solow Growth Model is an economic theory that explains how different factors contribute to a country's long-term economic growth. It emphasizes three key elements: capital accumulation (investments in buildings, machinery, etc.), labor growth (the increase in workforce), and technological progress (advancements that make production more efficient). According to the model, sustained growth primarily comes from technological innovation, while increases in labor and capital alone lead to diminishing returns. Overall, the Solow Model helps economists understand the importance of technology and investment in boosting a nation's economy over time.