Technological progress breakthrough inventions. Dr hab. Joanna Siwińska-Gorzelak

Transcription

1 Technological progress breakhrough invenions Dr hab. Joanna Siwińska-Gorzelak

2 Inroducion Afer The Economis : Solow has shown, ha accumulaion of capial alone canno yield lasing progress. Wha can? Anyhing ha allows he economy o add o is oupu wihou necessarily adding more labour and capial echnology! Bu Solow did no explain where i came from or how i could be acceleraed. Invenion, innovaion were all exogenous influences, lying ouside his heory.

3 Inroducion The escape required a hree-poin urn. Firs, Romer assumed ha ideas were goods of a paricular kind. Ideas are non-rival : everyone can make use of a single design, recipe or blueprin a he same ime. Second, he fabricaion of ideas enoys increasing reurns o scale. Expensive o produce, hey are cheap, almos cosless, o reproduce. Thus he oal cos of a design does no change much, wheher i is used by one person or by a million. Third, unless idea facories can enoy some measure of monopoly over heir designs by paening hem, copyrighing hem, or us keeping hem secre hey will no be able o cover he fixed cos of invening hem. We need o abandon perfec compeiion!

4 reliminaries Assume wo secors one is producing consumer goods and services and he oher one buys invenions from innovaors and produces inermediae goods used in he producion of he consumer goods secor. New invenions are compleely independen from he previous ones hey do no make he previous ones obsolee

5 The consumpion goods secor roducion funcion in his secor akes he form of : N Y AL X Where X denoes he inermediae good of ype We can hink abou he nex ypes of X (nex s) as invenions ha belong o compleely differen classes, so he he marginal produc of X does no depend on X2 For example : compuer priners, vehicles, coffee machines Technological progress is equivalen o an increase in N, so he invenions' of nex X es

6 The consumpion goods secor Sekor produkuący dobra i usługi Noe ha he increase in N leads o an increase in producion, holding a given employmen level L and a given level of all he remaining X es Jus like in he case of he Solow model, he decreasing marginal produc of each X and labour will lead o producion sabilisaion in he absences of echnological progress.

7 The consumpion goods secor The profi of a company i in every period: Y i w L i i N i X i Where is he price of inermediae good X rofi maximisaion implies a given demand for X (negaively correlaed wih he price of his good): d dx X i ( AL i AL i X ) i / ( A ) / L

8 The consumpion goods secor Hence, he consumpion goods secor demands a cerain level of each ype of X The X es are supplied by he R&D secor

9 R&D secor Invenions are produced in he R&D secor Each invenion (each X) is paened, so ha he paenholder is he only producer of his good X (Acually, he original models assumes ha invenors sell he righ o produce X (he paen) o anoher person, who becomes he only producer ) Assume ha once X is invened, is marginal cos of producion is. However, he cos of invening he X (or he cos of he paen) is equal o η (unis of Y)

10 R&D secor The enry in o he R&D secor is free, so anyone can buy a paen and produce a given ype of good X Hence, he R&D secor is compeiive, in he sense ha he enry is free(so here can be many producer); bu each producer has a monopoly power over her X

11 R&D secor Once he paricular design for X has been invened (he blueprin for good X has been developed), he revenue from producing X ha goes o he paenholder is ( ) ( ) X e r

12 The paen-holder is a monopolis s and ses he price for good X o maximise her revenue / / / ) ( 0 ) ) ( ( ) ( ) ( ) (, ) ( L A d d L A L A X where X Max R&D secor

13 ..and coninuing from he previous slide R&D secor ) ( ) (

14 This implies ha he quaniy of X is X ( A ) A) And he monopolis receives a profi of: R&D secor / L ( 2 / L [( ) X 2 [ ( A) ] e r / Recall however he cos of invenion η (or he cos of buying he paen) If here are no barriers o ener ino he R&D secor, hen L] e 2 [( )( A) r / L] e r

15 R&D secor The free enry condiion o he R&D secor implies, ha he exisence of big profis will arac new (poenial) producers These producers will need an access o finance (for example o pay for he up-fron coss) hence more producers means higher demand for funds (savings) and higher ineres rae Higher ineres rae brings profis down and resores equilibium

16 Due o free enry, we know ha discounred profi mus be equal o η, so he ineres rae is: R&D secor L A r r L A e L A r / 2 / 2 / 2 ) ( ] ) ( [ ] ) ( [

17 Households L A c c r c c / 2 ) ( The growh rae of consumpion is consan We know ha i is also equal o he growh rae of oupu per person We know ha households maximise uiliy when:

18 Households The growh rae of he economy depends on he profis of innovaors (paen - holders) and he coss of R&D (paens) Subsidising he R&D secor is a policy ha should increase he growh rae Scale effec more workers in he consumer goods secor imply a higher he growh rae

19 The Follower Counry The rae of growh: c c r F F Assuming ha boh counries are idenical, excep for he coss η, he rae of growh in he F counry will be higher han he rae of growh in L counry L F

20 Convergence If he counries differ wih respec o A and L, hese differences will also impac he differences in he growh rae Assuming, however, ha hese differences do no exis (or are small enough), he F counry's growh rae will be higher, so he counry evenually cach up wih he leader. Then boh counries will develop a he same rae The follower counry reduces (or closes) he gap beween o he leader. The model predics convergence; bu no because of diminishing reurns, as i was in he neoclassical models

21 Empirics: how o measure echnological progress? We have o assume a producion funcion Y A K L Take logs ln( Y ) ln( A ) ln( K ) ( ) L And differeniae wih respec o ime: Y Y A K ( ) A K L L

22 How o measure echnological progress? Technological progress or oal facor produciviy (TF) is: A A Y K ( ) Y K L L

23 Technological progress Noe ha TF measures he par of produciviy growh, for which he company has no paid. For example- he company buys a beer machine, which makes he producion much quicker. Beer machine is he resul of echnical progress, bu his progress will no be "visible" in he calculaions - because progress is "conained" in he machine and i will be couned as an increase in capial

24 Technological cach-up Benhabib&Spiegel; Human capial and echnology diffusion

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26 Technological cach-up Technologiczny cach-up F. Manca (200), Journal of Macroeconomics

27 F. Manca (200), Journal of Macroeconomics

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29 Compuer diffusion

30 Conclusions We need monopolies (monopolies can be good ) Wihou propery righs, copyrighs here is no echnological progress Is i us a coincidence ha he indusrial revoluion has sared, when copyrigh laws were developed in Wesern economies (Jones Inroducion o Economic Growh ) Subsidising research (decreasing he coss of research) should increase he growh rae