Abstract

The Solow-Swan growth model, formulated independently by Robert Solow (1956) and Trevor Swan (1956), remains a cornerstone in the theoretical foundation of economic growth. It provides a framework to understand the dynamics of economic growth, emphasizing the roles of capital accumulation, labor growth, and, crucially, technological progress. The model’s elegance and simplicity have made it a fundamental tool in economics, offering insights into the determinants of long-term growth and the convergence of income levels across economies. However, despite its widespread acclaim and utility, the Solow Model’s treatment of technological progress—assumed to be exogenous—has been a point of contention, especially when applied to developing economies. These economies often face distinct challenges, including limited access to technology, barriers to innovation, and structural constraints, which can significantly influence their growth trajectories and the applicability of the Solow Model’s predictions. This paper aims to critically examine the Solow Growth Model, with a particular focus on the aspect of technological progress in the context of developing economies. We argue that while the model provides a valuable starting point for understanding growth dynamics, its conventional formulation may not fully capture the complexities associated with technological advancement in less developed contexts. The importance of this investigation stems from the ongoing need to refine economic theories to better reflect the realities of a diverse global economy, where the mechanisms of growth and development can differ markedly from those presupposed in more generalized models. Through a detailed theoretical examination, this paper will highlight the limitations inherent in the Solow Model’s original assumptions about technology and explore potential modifications and extensions that can enhance its relevance and applicability to developing economies. By doing so, it contributes to the broader discourse on economic growth, offering insights that could inform more effective and nuanced development policies. In pursuit of this objective, the paper will navigate through a series of analytical dimensions, beginning with a comprehensive overview of the Solow Model, followed by a critical assessment of its approach to technological progress, and culminating in a discussion of theoretical and empirical adaptations that attempt to reconcile the model with the developmental realities of economically diverse nations.

Keywords: Economic growth, Slow growth model, Growth dynamics, Global economy