Foundations of Economic Development

DYNAMIC ECONOMICS with increasing returns is extended tocope with economic growth, the business cycles and theirregular swings in the long-term development as differentaspects of the same dynamical system, the economic system"as a whole".HUMAN CAPITAL emerges as the seminal concept: economicgrowth is in this dynamics causally reduced to the growth ofhuman capital and thus to the growth of exact scientificknowledge. An analysis of this knowledge shows that qualityeducation in hard sciences must be a prime target of futureeconomic policies.A CAUSAL STRUCTURE, new in economics, underlies the extendeddynamics. To enable students to study and to improve it, adetailled introduction to nonlinear causality is given,emphasizing the points relevant to this causal structure.NATIONAL ACCOUNTING and input-output dynamics are suggestedto be extended to include also the production prices andproduction of human capital and of human time, by using amethod of calculation indicated in detail in the book.