Human capital, expanding product variety and sustained growth

We present a model that endogenizes both product innovation and human capital formation, and examine the economic conditions that give rise to sustained growth from a long-term perspective. Human capital is postulated as the critical input necessary for R & D; that is, our model implies that an economy generates innovation by virtue of human capital accumulation. The rate of economic growth in the long-run depends on factors such as those that reflect preference, technology and externality.