Factor-eliminating technical change

•We study economic growth through eliminating rather than augmenting non-reproducible factors.•We obtain the balanced growth path and complete transition dynamics in market equilibrium.•The singularity restriction required for growth is an endogenous and intuitive outcome.•Several testable and sometimes unexpected implications receive support from the data.

Perpetual growth requires offsetting diminishing returns to reproducible factors of production. In this article we present a theory of factor elimination. For simplicity and clarity, there is no augmentation of non-reproducible factors, thus excluding the standard engine of growth. By spending resources on R&D, agents learn to change the exponents of a Cobb–Douglas production function. We obtain the economy's balanced growth path and complete transition dynamics. The theory provides a mechanism for the transition from an initial technology incapable of supporting perpetual growth to one with constant returns to reproducible factors that supports it.