Week 10: Technology Flashcards
Solow growth model: What determines long run growth and why?
TFP (A) determines growth in long run
Since capital labour ratio is constant - capital flows to countries that need the most
First Industrial Revolution — what technology created
Steam engine - key advancements in transport
Second Industrial Revolution - examples of invention
Electric light
Tap water
Telephone, radios
Cars
So markets more efficient and living standards improve, specialisation can occur since more can move.
Third Industrial Revolution
Computers and internet
Neoclassical view on technology
Technology improvements flow immediately and freely
Eval: if technological improvements flow immediately and freely
Why dont technologies get adopted e.g why dont more farmers in developing countries use fertiliser? (5)
Unknown/uncertain returns
Don’t know how to use technology
Credit constrained
Complementarities e.g fertiliser also needs strong irrigation
Public good aspects - potential free riding so no one buys
What is to consider while looking at phones
Phones ≠ internet
What % of population have access to internet in Nigeria
55%.
Quite low (it is access to internet, so like can access it close!!)
Jensen - mobile phones on market efficiency
Research design
Fisherman can only go to one market to sell (transporation time and costs)
Cell phones so fisherman can call/text while still at sea to get prices at each market
Findings on price of fish
Law of one price held - After phones introduced, variability (dispersion) in prices fell. Prices became similar (no arbitrage!)
Findings on waste (% of fishers not selling their catch)
Why was this result?
% of fishers not selling their catch reduced from 8% to 0% no waste.
Why? Fishers can respond to excess demand/supply
THUS PHONES IMPROVED MARKET EFFICIENCY IMPROVED THROUGH PRICES AND WASTE
Where else can mobile phones benefit development
Banking
Political economy
Health
Banking - Jack and Suri
Mobile money M-PESA (done before!!) - reduced transaction cost since banking online
Political economy - Aker
Phones increased voter turnout and increasing knowledge of political process
Health - Pop-Eleches
Text reminders weekly increase adherence to follow HIV treatment.
(So phones are good for information just like political economy case!)
