The model builds on the Romer model (1990), and in particular it generalizes or modifies the description of how new technologies, ideas, or design instructions arise by taking into account the criticism of the Romer model that the long-term growth rate depends positively on the size of the population (economies of scale).
This is problematic because empirically larger countries have not necessarily grown faster than smaller ones; and as total human population increased during the 20th century, growth did not speed up.
[1] Furthermore, the extent of influence from the current state of knowledge on new inventions (standing on shoulders effect).
For a single company i According to the following modeling applies to the emergence of new ideas or design instructions: With where the parameters take the following values:
After aggregation across all companies results: Here the parameters have the following meaning: In the Jones model, growth in steady state is given by: