Recall that in the Harrod-Domar, Kaldor-Robinson, Solow-Swan and the Cass-Koopmans growth models, we have maintained, either explicitly or implicitly, that technical change is "exogenous". In the Schumpeter version, this was not true: we had "swarms" of inventors arising under particular conditions. The Smithian and Ricardian models also had technical change arising from profit-squeezes or, in the particular case of Smith, arising because of previous technical conditions.
Allyn A. Young (1928) had argued for the resurrection of the Smithian concept in terms of increasing returns to scale: division of labor induces growth which enables further division of labor and thus even faster growth. The idea that technological change is induced by previous economic conditions one may term "endogenous growth theory".
The need for a theory of technical change was there: according to some rather famous calculations from Solow (1957), 87.5% of growth in output in the United States between the years 1909 and 1949 could be ascribed to technological improvements alone. Hence, what is called the "Solow Residual" - the g(A) term in the growth equation given earlier, is enormous. One of the first reactions was to argue that by reducing much of that influence to pure capital improvements, capital-intensity seem to play a larger role than imagined in these 1957 calculations - Solow does go on to argue, for instance, that increased capital-intensive investment embodies new machinery and new ideas as well as increased learning for even further economic progress (Solow, 1960).
However, Nicholas Kaldor was really the first post-war theorist to consider endogenous technical change. In a series of papers, including a famous 1962 one with J.A. Mirrlees, Kaldor posited the existence of a "technical progress" function. that per capita income was indeed an increasing function of per capita investment. Thus "learning" was regarded as a function of the rate of increase in investment. However, Kaldor held that productivity increases had a concave nature (i.e. increases in labor productivity diminish as the rate of investment increases). This proposition, of course, falls short of Solow's insistence on constant returns. asdsadasdasda
K.J. Arrow (1962) took on the view that the level of the "learning" coefficient is a function of cumulative investment (i.e. past gross investment). Unlike Kaldor, Arrow sought to associate the learning function not with the rate of growth in investment but rather with the absolute level of knowledge already accumulated. Because Arrow claimed that new machines are improved and more productive versions of those in existence, investment does not only induce productivity growth of labor on existing capital (as Kaldor would have it), but it would also improve the productivity of labor upon all subsequent machines made in the economy.
In history, it seems inarguably true that when a nation advanced in power and wealth, changes will soon followed. These changes affected the political, economic and social system of that nation, and often came as an advantage for wealthy individuals, while detrimental to others less fortunate. An example of this notion can be seen in American History. After the Civil War and the Reconstruction Era, America quickly surpassed Great Britain in industrial production thus became the leading nation in industrialization. However, great things do not come without a cost; the rapid technological expansion in the US would initiate the crisis of the 1890s. The crisis of the 1890s was the shift from the rural and agrarian society to a modern urban and industrial society.
Technology transformed the United States during the Gilded Age by the changing of American labor force. During this period, America changed into a more industrial society. Many Go-Getters sought the land of the United States very prosperous, and ventured in hopes of opportunity. The immigrants would soon shape the development of American labor in the latter part of the 19th century. The “four major trends—loss of control over workplace, labor con...
Miller, Derek D Essay: Brave New World and the threat of technological growth Vol 3 2011.Print
During the last 40 years of the nineteenth century the United States became the worlds greatest economic power. The rapid rate of economic growth happened for a
Robert E. Lucas Jr.’s journal article, “Some Macroeconomics for the 21st Century” in the Journal of Economic Perspectives, uses both his own and other economist’s models to track and predict economic industrialization and growth by per capita income. Using models of growth on a country wide basis, Lucas is able to track the rate at which nations become industrialized, and the growth rate of the average income once industrialization has taken place. In doing so, he has come to the conclusion that the average rate of growth among industrialized nations is around 2% for the last 30 years, but is higher the closer the nation is to the point in time that it first industrialized. This conclusion is supported by his models, and is a generally accepted idea. Lucas goes on to say that the farther we get from the industrial revolution the average growth rate is more likely to hit 1.5% as a greater percentage of countries become industrialized.
The End of Growth, by Richard Heinberg, goes into deep discussion of the current state of the economy and the its future state when growth ceases. Richard Heinberg discusses current trends within the economy that predict our eventual result. The author makes it very clear that growth is important. As a society, and a planet, we depend on growth. However, certain types of growth, specifically economic growth, are on a path to destruction. He suggests that we find a different definition of growth and focus on that instead of growing from an economic standpoint. Throughout the book, Heinberg uses the image of a balloon to describe our situation. He depicts our society as a balloon that is getting pumped up to be too large and will eventually pop. In other words,
regarded as one of the most dramatically influential philosophers or philosophic writers of modern times. This book is a comprehensive and systematic theory of an economy. It shows the connections and relationships among variables. The Wealth of Nations also talks about the division of labor. Smith states that the division of labor starts the process of economic growth. One growth is started, accumulation keeps it going. There are three benefits of division of labor. First; increase in skill and dexterity. Second; save time in moving from job to job. And lastly, the invention of new machinery.
...ductivity shaped the development of the American economy in the 1920s. The nation’s industries shifted from coal to electricity. Mass production, electrification, and other innovations increased American productivity and established industries flourished while new industries developed. One of the most signigicant inventions during this time was the assembly line. This made hard work become less tedious and forever changed the lives of factory workers.
Advancements in new technology clearly promoted the industrial growth of the United States. The new technologies allowed business owners to reduce labor in the movement of materials from one point to the other. This occurred by using the new technology of railroads and machinery. Business owners used the railroads to transport their finished product and raw materials around the country more efficiently, which enabled businesses to expand. The business owners were now able to use machines for lifting materials from one floor to another and to use conveyer belts to move materials around on an assembly line. The use of machines is evident because the graph in document 5 clearly shows that American industrial and agricultural power sources between 1850 and 1900 changed. This is evident because in 1850, only 13% human power and 35% water and coal power was used, but in 1900 a mere 5% human power and a whopping 73% water and coal power was used. The use of machines more than doubled over the course from 1850-1900, and the human output de...
Compare and contrast the Solow Growth Model with one Endogenous Growth Model In order to compare two models of economic growth, I will look at the primary model of exogenous growth, the Solow model, and ArrowÂ’s endogenous growth theory, based on research and development generated within the system. I will define the models and identify their similarities and differences. The Solow model, or Neoclassical growth model as it is sometimes known, is an example of exogenous growth models. This is to say that the level of economic growth depends on externally determined rates of growth in certain variables.
Productivity in the United States, due to new innovations (that are coming together after years of investment), is growing to levels not seen since the 1960’s. For example: productivity growth has averaged 2.3 percent from 1996 to 1999, doubling the 1.1 percent average productivity growth from 1973 to 1995. At a rate of two percent from 1996 to 1999, labor has also increased, as unemployment fell and welfare recipients have gone to work. The economy has been growing at a rate of about 4.5 percent each year, due to this.
Review of: Olson, Matthew S., Van Bever, Derek ,Verry, Seth. 2008. When Growth Stalls. Harvard Business Review, 51-62.
Historically though, the impact of technology has been to increase productivity in specific areas and in the long-term, “release” workers thereby, creating opportunities for work expansion in other areas (Mokyr 1990, p.34). The early 19th Century was marked by a rapid increase in employment on this basis: machinery transformed many workers from craftsmen to machine minders and although numbers fell relative to output – work was replaced by employment in factories (Stewart 1996, p.13).
A new era of development was growing to a second industrial revolution with improved technology and better economic prospects large scale manufacturing of machine tools and machinery in factories increased as well as the means to do so became available.
Economic growth is one of the most important fields in economics. In current generation economic is developing well. Economic growth is really important to country and for the world as well. Economic are one of the identity for country because it shows a country development and attraction for other countries (F, Peter. 2014). For example well economic develop such as Singapore, Dubai, New York, and Japan. These countries are well develop and maintaining their economic growths. Economic growths are really important because higher average incomes enables consumers to enjoy more goods and services. Then, lower unemployment with higher output and positive economic growth firms tend to utilize more workers creating more employment. Enhanced public