According to 'new growth theory', the market will lead firms to accumulate the efficient level of knowledge capital.

Question

Quizplus · Accepted Answer

According to new growth theory, the market alone may not lead firms to accumulate the efficient level of knowledge capital. Instead, government intervention or collaboration with other firms may be necessary to promote knowledge spillovers and encourage investment in research and development.

According to 'New Growth Theory', the Market Will Lead Firms