4. Technology in Growth Theory: The Branch of Economics that Develops Models to Explain the Factors Underlying the Economic Growth of Nations Model as a Vending Machine: Put in Inputs, and Out Come Outputs. Then Test the Model by Comparing its Results with Data or Proxies)
5. In Classical Growth Theory , Growth in GNP is Ascribed to Increased Capital Investment and Application of Labor. Technology is Assumed to Advance on its own, improving productivity independent of economics, politics or anything else, and is Represented as an ‘Exogenous Factor’ Outside the Model.
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9. US Comparative Advantage is in the Early Part of the Product Cycle, Even Though this is Labor Intensive. Its Productivity is Due to the High Margins (i.e., ‘Economic Rents’) Derived from Technological Monopoly. Technology is Only One of Many Ways to Gain Rents by Control of a Key Link in the Value Chain (cf. Kaplinsky)
12. AN ASIDE: Risk is a Variable to be Managed , not a Market Imperfection. There is Actually a Market for Risk! It’s Called Finance: Investment, Insurance and Banking. This Market Can Be Imperfect – viz., the Mortgage Crisis
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17. Induced Innovation By Prices By Policies By Regulations By Government Demand (Military or Civilian)
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20. Yet Contrary to Logic, We Tax What We Want to Encourage (Employment) and Subsidize What We Want to Discourage (Use of Virgin Resources) :( Politics Beats Economics Every Time ):
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24. Technology Responds to Economics, and Economics Responds to Policy A Segue into ‘Principles of Science and Technology Policy’
Notas do Editor
Technology is a Driver of Economic Growth Investment in Education (‘Human Capital’), Information, Research, and Innovation is a Form of Capital Savings Investment in Capital Goods is an Investment in ‘Embodied Technology.’ Knowledge-Based ‘Dynamic Comparative Advantage’ Can be Created by this Investment This Investment Responds to Economic Conditions (Business Climate, Macroeconomics, Markets, Competition, Income Distribution) and to External Inducements (e.g., Taxes, Subsidies) So Technology should be Represented as an Endogenous (Inside the Model) Factor of Growth
AN ASIDE: Risk is not a Market Imperfection. It’s a Variable to be Managed , e.g., by Hedging, Diversifying or Obtaining Higher Rate of Return to Compensate for Higher Risk. There is Actually a Market for Risk! It’s Called Finance: Investment, Insurance and Banking. This Market Can Be Imperfect – viz., the Mortgage Crisis
Examples of Innovation Induced by Prices Over Time, US Economy has ‘Dematerialized’ in Response to Environmental Restrictions High Raw Materials and Energy Prices of the 1970s It’s Tough (though not impossible) to Push Energy Conservation when Energy was Cheap (An aside: Energy companies haven’t invested in research because energy prices have varyed wildly from year to year.) High Oil Prices have Created Increased Interest in Alternative Energy and Conservation Using Existing Technology If Energy Companies become Convinced that these Prices Seem Here to Stay (Energy Prices Oscillate Wildly), Increased Investment in Research and Development will Follow
