Impact of Technology on Growth
3 important questions on Impact of Technology on Growth
Name three attributes of technology
1. Investment in the form of R&D is needed for innovation
2. Technologies are non-tangible. Non-rivalry
3. Excludability is low
Creative Destruction: One company's innovation destroying another company's tech
2. Technologies are non-tangible. Non-rivalry
3. Excludability is low
Creative Destruction: One company's innovation destroying another company's tech
Formulate the One-country world model in relation to economic growth
Y = A(1-y)
The more people working on R&D in the short run. The less profits you obtain.
Yg = (y/u)*L
The more people working on R&D in the long run. The more profits you gain
The more people working on R&D in the short run. The less profits you obtain.
Yg = (y/u)*L
The more people working on R&D in the long run. The more profits you gain
Formulate the Two-country model in relation to economic growth
Both countries have same population
Both countries have same growth rate
Make a distinction between the leader and the follower
Leader does not copy(Innovation) knowledge: A = (y/Ui)L
Follower copies (Imitation). The bigger the gap the smaller the costs. A = (y/Uc)L
uc = Yf/Yl*Ui
Countries are in a steady state. If the follower has a higher growth rate the imitation will become more expensive and they will grow less moving back to the equillibrium.
Increase in growth only leads to a temporarily boost
Both countries have same growth rate
Make a distinction between the leader and the follower
Leader does not copy(Innovation) knowledge: A = (y/Ui)L
Follower copies (Imitation). The bigger the gap the smaller the costs. A = (y/Uc)L
uc = Yf/Yl*Ui
Countries are in a steady state. If the follower has a higher growth rate the imitation will become more expensive and they will grow less moving back to the equillibrium.
Increase in growth only leads to a temporarily boost
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