Recall that in the Harrod-Domar, Kaldor-Robinson, Solow-Swan, and Cass-Koopmans growth models, we argued, explicitly or implicitly, that technical change is "exogenous." In Schumpeter's version this was not true: we had "swarms" of inventors who arose in particular conditions. The Smithian and Ricardian models also featured technical changes resulting from profit compression or, in Smith's particular case, resulting from prior technical conditions. Allyn A. Young (1928) had argued for the resurrection of the Smithian concept in terms of increasing returns to scale: the division of labor induces growth which allows further division of labor and thus even more rapid growth. The idea that technological change is induced by previous economic conditions can be called “endogenous growth theory”. There was a need for a theory of technical change: according to some rather famous calculations by Solow (1957), 87.5% of the growth in output in the United States between the years 1909 and 1949 could be ascribed to technological improvements alone. So, what is called the “Solow Residue” – the g(A) term in the growth equation given above, is huge. One early reaction was to argue that, by reducing much of that influence to pure capital improvements, capital intensity appears to play a larger role than imagined in these 1957 calculations – Solow goes on to argue, for example, that capital increase- intensive investments incorporate new machinery and new ideas as well as increased learning for further economic progress (Solow, 1960). However, Nicholas Kaldor was indeed the first postwar theorist to consider technical change endogenous. In a series of articles, including a famous one in 1962 with JA Mirrlees, Kaldor hypothesized the existence of a "technical progress" function. that per capita income was in fact an increasing function of per capita investment. Thus “learning” was considered a function of the rate of increase in investment. However, Kaldor believed that productivity increases have a concave nature (i.e. increases in labor productivity decrease as the rate of investment increases). This proposal, of course, falls short of Solow's insistence on constant returns. asdsadasdasdaK.J. Arrow (1962) believed that the level of the "learning" coefficient was a function of cumulative investment (i.e., past gross investment). Unlike Kaldor, Arrow sought to associate the learning function not with the growth rate of investments but rather with the absolute level of knowledge already accumulated. Since Arrow claimed that the new machines are improved and more productive versions of existing ones, the investments would not only induce growth in the productivity of labor on existing capital (as Kaldor would have it), but would also improve the productivity of labor on all subsequent machines. made economically.