The Solow Growth Model

The Solow Growth Model explains how a country's economic output grows over time based on factors like capital (machines, infrastructure), labor (people), and technology. It shows that investing in capital boosts growth initially, but gains slow down as returns diminish. Long-term growth largely depends on technological advances, which make labor and capital more productive. The model helps us understand why countries grow at different rates and highlights the importance of innovation and savings for sustainable economic progress.