In the context of endogenous growth theory, the Nobel laureate Paul Romer emphasized that "ideas" are
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1 mark, −0.333Economics of Growth and DevelopmentEndogenous growth and technical progressEndogenous growth: AK and R&D modelsModerateabout 1 min
GATE 2023 Question 36: Endogenous growth and technical progress
Answer and worked solution
Answer: (A)
A central insight of Paul Romer's endogenous growth theory is that ideas (knowledge, technology, designs) are non-rival goods — unlike physical capital or labor, one person or firm using an idea does not prevent others from using it simultaneously (e.g., a blueprint or formula can be used by unlimited producers at once). This non-rivalry is what allows ideas to generate increasing returns and drive persistent long-run growth, distinguishing Romer's model from earlier growth theories built purely on rival, scarce inputs.
(B), (C), and (D) all mischaracterize ideas as rival goods with varying degrees of excludability — this contradicts the non-rivalry property that is the actual centerpiece of Romer's contribution.
Therefore the answer is (A) non-rival.
The trap: (C) rival with high degree of excludability
Students sometimes conflate 'rivalry' with 'excludability' — ideas CAN often be made excludable (e.g., via patents), which might tempt a student toward an option mentioning 'high excludability,' but excludability is a separate property from rivalry, and Romer's key emphasis is specifically on the non-rival nature of ideas, not their excludability.
Endogenous growth and technical progress has come up 25 times in 6 exams since 2016.
What this question tests
This question is on Endogenous growth: AK and R&D models, part of Endogenous growth and technical progress in Economics of Growth and Development.
Models where long-run growth comes from within the model, from capital or from ideas.
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