The Positive Sum Strategy Harnessing Technology for Economic Growth (1986) / Chapter Skim
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Macroeconomics and Microeconomics of Innovation: The Role of the Technological Environment
Macroeconomics and Microeconomics of Innovation: The Role of the Technological Environment
Pages 327-332
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From page 327... ...
Since each group brings a very different perspective to the problem, increased communication should lead to a richer analytic framework and a deeper understanding of the sources and nature of technological change. OVERVIEW A brief description of the approach of each group will indicate some of the ways in which a greater synthesis of the two approaches could increase our understanding of technical change and productivity growth.
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From page 328... ...
Consequently, although relative input prices drive the allocation of inputs within the context of the economists' production or cost functions, Hey tend to be ignored in engineering production functions. Conversely, while He technological environment tends to drive engineering production functions, it is often ignored in economic production functions.
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From page 329... ...
On balance, depending on the relative magnitude of these effects, one would observe increased productivity growth and technical change that could be described as labor saving, neutral, or capital saving. Clearly, however, the ex post aggregate characterization of technological change in any of these terms is not particularly enlightening, since it does not indicate how this technical change came about and what specific innovations contributed to it.
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From page 330... ...
Let me begin with Jorgenson's chapter, which analyzes the sources of productivity grown in the American economy in the postwar period. As is true in most analyses of this type, Jorgenson employs a neoclassical framework, which assumes that firms operate in perfectly competitive input and output markets and that they utilize an aggregate production function that transforms aggregate inputs (capital, labor, electrical energy, and nonelec
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From page 331... ...
Nevertheless, it would be even more useful to know why those industries exhibited different patterns of growth and what determined the magnitude of the stimulating or inhibiting effects of input price changes on productivity growth. Without such knowledge, neither businessmen nor policymakers have any real guides concerning appropriate actions they could take to increase productivity growth in particular industries and in the nation as a whole; nor do they know whether past relationships between input prices and productivity growth can be expected to continue in the future.
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From page 332... ...
Is it the existence of R&D expenditures, per se, that stimulates labor arid capital productivity, or are R&D expenditures transfonned into specific innovations that make labor or capital more productive? Similarly, why does basic research stimulate total factor productivity independent of the level of R&D expenditures?
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