In addition, better education and training, and improved methods of organizing production may also give rise to increased productivity. The discovery of fresh natural resources, or improvements in a country's position on the world market, may also lead to higher standards of living. Solow has created a theoretical framework which can be used in discussing the factors which lie behind economic growth in both quantitative and theoretical terms. This framework can also be exploited to measure empirically the contributions made by various production factors in economic growth. Solow's starting point is that society saves a given constant proportion of its incomes.
Capital intensity is determined by the prices of production factor.
This involves a situation in which per capita production and real wage no longer increase. An increase in the proportion of incomes which is saved cannot, therefore, lead to a permanent increase in the rate of growth. In contrast, an economy with a higher savings ratio, experiences higher per capita production, and thus higher real income. But, in the absence of technological progress, the rate of growth will be the same, irrespective of the savings quotient, and will be purely dependent on an increased supply of labor. As a result, technological development will be the motor for economic growth in the long run.