Optimal investment allocation key to sustainable growth in modern economy
The article explores how a modern economy can grow sustainably by focusing on knowledge and human capital while using up natural resources. It aims to find the best way to allocate investments in physical capital, human capital, natural resources, and knowledge for maximum growth. The researchers use a model that includes all four factors of production and show that investing in education can turn population into human capital. They also find that the rate of savings and consumption remains constant and that growth depends on investments in each sector of the economy.