The Solow Model

 We can use a simple economic model called the Solow Model to figure out how countries like China, that have bad institutions, have an exploding economy. The Solow Model is made up of three basic factors. The first is L, which represents labor. Education, represented by E, is multiplied by L to get our human capital. K represents our physical capital, our resources. A represents our ideas, how we convert our human capital and physical capital into products and services.