The Soft Revolution

Paul Romer is one of the major precursors of the new growth theory. Intangible assets underlie Romer's ideas. They are what he calls software. The title of this post replicate Romer's marvelous essay on the ideas behind the new growth theory. In this paper, Romer starts with an astonishing question: If the quantity of raw materials on earth has not changed over time, how could it be that we have more total wealth per person than we have ever had before?

Romer argues that the answer to this increase in wealth lies on human's capacity to rearrange things to make then more useful and valuable. This paper is worth reading for those who want to understand the role of intangibles on economic and corporate growth! See: "The Soft Revolution". In: Journal of Applied Corporate Finance, Summer 1998.