story in the history of economics, featured in many economic textbooks, recent reappraisal of Harrod's work has contested it. One central criticism is that Harrod's original piece was neither mainly concerned with economic growth nor did he explicitly use a fixed proportions production function. Long-run implications A standard Solow model predicts that in the long run, economies converge to their steady state equilibrium and that permanent growth is achievable only through technological progress. Both shifts in saving and in populational growth cause only level effects in the long-run (i.e. in the absolute value of real income per capita). An interesting implication of Solow's model is that poor countries should grow faster and eventually catch-up to richer countries. This convergence could be explained by: Lags in the diffusion on knowledge. Differences in real income might shrink as poor countries receive better technology and information; Efficient allocation of international capital flows, since the rate of return on capital should be higher in poorer countries. In practice, this is seldom observed and is known as Lucas' paradox; A mathematical implication of the model (assuming poor countries have not yet reached their steady state). Baumol attempted to verify this empirically and found a very strong correlation between a countries' output growth over a long period of time (1870 to 1979) and its initial wealth. His findings were later contested by DeLong who claimed that both the non-randomness of the sampled countries, and potential for significant measurement errors for estimates of real income per capita in 1870, biased Baumol's findings. DeLong concludes that there is little evidence to support the convergence theory. Assumptions The key assumption of the Solow–Swan growth model is that capital is subject to diminishing returns in a closed economy. Given a fixed stock of labor, the impact on output of the last unit of capital accumulated will always be less than the one before. Assuming for simplicity no technological progress or labor force growth, diminishing returns implies that at some point the amount of new capital produced is only just enough to make up for the amount of existing capital lost due to depreciation. At this point, because of the assumptions of no technological progress or labor force growth, we can see the economy ceases to grow. Assuming non-zero rates of labor growth complicate matters somewhat, but the basic logic still applies – in the short-run, the rate of growth slows