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Economic growth is best driven by it's people - Nobel prize reaffirms

Paul Romer (on the picture) together with William Nordhaus were awarded the 2018 Nobel Memorial Prize in Economic Sciences for their work on long-term economic growth. Picture by the Wall Street Journal.

"At the most basic level, an economy grows... whenever people take resources and rearrange them in a way that makes them more valuable," Paul Romer is quoted as writing.

Romer, an economist at NYU, won half of the Nobel Memorial Prize in Economic Sciences for his life's work on the “endogenous growth theory”, which is centered around how new ideas — obtained by people, and born through technological advancement,— can drive sustainable, long-term economic growth.

How has this been influential?

This strand of thinking has spurred government interventions to drive economic growth by boosting skills and knowledge. Even international organizations like the International Monetary Fund have adopted an analysis of “Total Factor Productivity’ which follows from growth theory such as Romer’s work. An example applied to Aruba can be found here on page 13.

Source: IMF 2015

What does this mean for Aruba?

This reminds us of the importance of investing in people. Through education, funding research and development and, as one of our previous articles on Aruba discussed: implementing policies to make sure our best and brightest return home to boost the economy.

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