Economic development as problem solving : a model of guns, germs and steel

Abstract

This paper presents a model where the knowledge occurs through solving "problems." These problems which are partially idiosyncratic to the country. We think of a problem as a new technique or good. Each country must master the problems associated with an activity in order to achieve productivity increases and growth. We will follow the tradition of learning by doing models where learning occurs after production on a good, or a particular type or grade of a good. Growth occurs by solving or learning about successively harder problems.