This book takes a new look at the golden age in neoclassical growth
theory and explores in detail sustainability and optimum growth in
China, the US and Europe. Innovation, foreign direct investment, trade
and growth dynamics are key elements in modern economies - including
perspectives on green growth and aspects of the knowledge production
function in the context of multinational companies. As such the book
considers the role of foreign direct investment in a modified growth
model and discusses innovation in an enhanced Mundell-Fleming macro
model. Moreover, for the first time it directly links a knowledge
production function to the macro production function in a broader
context, including real money balances in the production function. It
shows - also with empirical relevance - that FDI inward stocks relative
to the GDP of host countries, the number of researchers and per capita
income are relevant drivers of new knowledge and the stock of knowledge,
respectively. This new Schumpeterian theoretical approach lends itself
to important policy conclusions for both OECD members and newly
industrialized countries.