Co-evolutionary growth: A system dynamics model

The paper presents a new modelling approach for the study of co-evolutionary economic growth. The system dynamics model studies the interactions between four main dimensions: physical capital, R&D and innovation, human capital, and population dynamics. These factors interact with each other in a complex manner, leading to co-evolutionary growth of the economic system. The model generates nonlinearities and multiple growth trajectories, determined by countries' structural characteristics and policy parameters. Developing economies that are able to activate and support synergies among their main growth engines can achieve a faster catch up process and more sustained income per capita level in the long-run than countries characterized by weak co-evolutionary dynamics.