technological progress Flashcards
what does Technological progress lead to
leads to increases in output for given
amounts of capital and labor.
The state of technology
A
extended production function
Y= (K,N,A)
K=capital
N=labor
A=state of technology
extended production function 2
Y=(K,AN)
AN = effective labour
assumptions of extended production function
-constant returns to scale
-decreasing returns to capital and effective labour
per effective worker
Y/AN = f(K/AN)
fertility of research
rnd leads to many new products
appropriability
If firms cannot benefit the profits from the development of new products, they will not engage in R&D and technological progress will be slow.
patents
give a firm that has discovered a new product—usually a new technique or device—the right to exclude anyone else from the production or use of the new prod- uct for some time.
technology frontier
advanced countries that should spend money on rnd to sustain growth. countries further away from the techfrontier grow by immitation rather than innovation
property rights
research and development (R&D)
balanced growth
labor in efficiency units
What determines the rate of technological progress?
the outcome of a firms research and development activities
why does a firm spend money on rnd
to turn a profit, by investing in rnd it increases the probability that it will develop a new product, if this product is successful than the firms profits will increase :D
What does the level of r&d spending depend on?
fertility of research—how spending on R&D translates into new ideas and new products
appropriability of research results - which is the extent to which firms can benefit from the results of their own R&D.
How should governments design patent laws?
So patent law must strike a difficult b Chapter 22.
balance. Too little protection will lead to little R&D. Too much protection will make it difficult for new R&D to build on the results of past R&D and may also lead to little R&D.
growth by innovation
growth by importing, adapting and imitating the existing technologies of the tech frontier advanced countries that are innovating them rather than developing new technologies of their own CHINA
Why does china have poor patent protection
because it is more of a user and imitator than an inventor such as the tech frontier, therefore it wouldn’t have many domestic inventions. also they allow domestic firms to use and adapt foreign technology without having to pay high royalties to the foreign firms that developed the technology.
Writing the production function in terms of capital and effective labor implies that as the level of technology increases by 10%, the number of workers required to achieve the same level of output _
decreases by 10%
If the rate of technological progress increases, the investment rate (the ratio of investment to output) must
increase to keep capital per effective worker constant
In steady state, output per effective worker grows at the rate of population growth.
false, it stays constant
In steady state, output per worker grows at the rate of technological progress.
true
growth rate of capital per effective worker at balanced growth
0, stays constant
growth rate of output per effective worker at balanced growth
0, stays constant
growth rate of capital and output at balanced growth/steady state
ga+gn
growth rate of labour at steady state/ balanced growth
gn
A higher saving rate implies a higher level of capital per effective worker in the steady state and thus a higher rate of growth of output per effective worker.
false, the change in saving rate does not change the rate of growth of output per effective worker only the level of output per effective worker
Even if the potential returns from research and develop- ment (R&D) spending are identical to the potential returns from investing in a new machine, R&D spending is much riskier for firms than investing in new machines.
true, as fundamentally r&d produces ideas which could be replicated by other firms also there’s running the risk that it won’t be fertile or appropriated
The fact that one cannot patent a theorem implies that private firms will not engage in basic research.
false
Technology has not played an important part in Chinese economic growth.
false, think growth by immitation and low patent protection so low costs not having high royalties paid to foreign producers.
Why is the amount of R&D spending important for growth? How do the appropriability and fertility of research affect the amount of R&D spending?
because it creates ideas which translate into new innovations of products
assess the likely impact on the growth rate and the level of output over the next five years and over the next five decades cause by a permanent reduction in the saving rate.
a permanent reduction in the saving rate will lead to a slower rate of output for some time but not forever eventually it will stop at a lower level of output per worker
assess the likely impact on the growth rate and the level of output over the next five years and over the next five decades cause by a permanent reduction in the rate of technological progress
the growth rate of output per worker would be reduced
- Discuss the potential role of each of the factors listed in parts a through g on the steady-state level of output per worker. In each case, indicate whether the effect is through A, through K, through H, or through some combination of A, K, and H. A is the level of technology, K is the level of capital stock, and H is the level of the human capital stock.
a. Geographic location
b. Education
c. Protection of property rights
d. Openness to trade
e. Low tax rates
f. Good public infrastructure
g. Low population growth
