Economic Development as Problem Solving

There has been a vast recent literature which has emphasized the role of human capital and knowledge on the economic growth process. This paper presents a model where the knowledge occurs through solving "problems." These problems which are partially idiosyncratic to the country. We think of a problem as a new technique or good. Each nation must master the problems associated with an activity in order to acheive productivity increases and growth. We will follow the tradition of learning by doing models where learning occurs after production on a good, or a particular type or grade of a good. Growth occurs by solving or learning about successively harder problems.