This paper combines three prototype endogenous growth models, themodels with human capital accumulation introduced by Uzawa  andLucas , variety expansion by Romer , and quality improvementsby Aghion and Howitt , in order to investigate how these threeengines of growth interact. We show that a subsidy to human capital accumulation has a positive impact on R&D effort, as well as on human capital accumulation. On the other hand, a subsidy to R&D sectors does not affect human capital accumulation in our model. Moreover, we show that equilibrium dynamics is locally saddle-path stable around the steady growth path. It suggests that Schumpeterian growth models a la Howitt  should share the locally saddle-path stable property. Finally, since in our model the percapita output growth rate is endogenously determined by both technology improvements and human capital accumulation, it bridges the gap between the literature on Schumpeterian growth models and that on growth empirics.
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