The document summarizes the key aspects of the new endogenous growth theory, including models proposed by Arrow, Romer, and Lucas. Arrow's "learning by doing" model endogenizes economic growth by treating knowledge as a side product of investment. Romer's 1990 model identifies a research sector that produces new ideas. Lucas' model assumes investment in education produces human capital, which spills over to increase productivity. While offering improvements over exogenous growth theory, the new endogenous growth theory has also received some criticisms around its assumptions and ability to explain differences in growth between countries.
New growth theory emphasizes that economic growth results from increasing returns associated with new knowledge, rather than diminishing returns to capital and labor. It views technological progress as endogenous and driven by economic forces like investment in research and development, rather than external factors. This challenged previous neoclassical growth models that treated technology as outside the economic system. New growth theory sparked renewed interest in explaining the sources of long-term economic growth.
The Lewis dual sector model of development describes an economy transitioning from subsistence agriculture to a more modern, urbanized structure. It consists of two sectors: a traditional subsistence sector with zero marginal productivity of labor, providing surplus labor; and a modern industrial sector where labor is transferred from the traditional sector, expanding output and employment through reinvested profits. However, the model is criticized for assuming profits are always reinvested when they could enable labor-saving investments or capital flight, and for assuming perfect competition in labor markets and unlimited surplus labor, which is inconsistent with historical evidence from developing countries.
Lewis proposed that less developed countries could stimulate growth by exploiting their unlimited supplies of labor. His model assumes these countries have high populations engaged in subsistence work, making labor perfectly elastic at that wage. The economies are dual, with a subsistence sector employing most workers at low productivity and a capitalist sector using capital. Growth occurs as labor moves from subsistence to capitalist sectors, increasing output and allowing reinvestment which further raises productivity and employment in a self-sustaining cycle until labor pressures subside. Bank credit can also aid capital formation though inflation is self-correcting. Critics argue the model overlooks demand factors and difficulties transitioning large agricultural populations.
This document provides an overview of the AK model of endogenous economic growth. It discusses how the AK model addresses limitations of previous exogenous growth models. The key aspects of the AK model are:
- It models economic output as a linear function of capital stock, without diminishing returns to capital.
- This allows for perpetual long-run growth, unlike exogenous models which predict convergence to a steady state.
- The growth rate depends on savings rate and the level of technology, represented by the parameter A. Improvements in A can permanently increase the growth rate.
The Harrod-Domer model theorizes that a country's economic growth rate is defined by its savings level and capital-output ratio. It suggests there is no natural balanced growth. The model was developed independently by Roy Harrod and Evsey Domar to explain growth in terms of savings and capital productivity. It requires continuous net investment to sustain real income and production growth. The model's assumptions include no government intervention, full initial employment, a closed economy, fixed capital-labor ratios and constant savings and interest rates. Its main criticism is the unrealistic assumption of no reason for sufficient growth to maintain full employment.
The theory of balanced growth proposes that simultaneous investments should be made across multiple industries in order to spur economic development. This would enlarge the market and incentivize more investment. Theorists like Lewis, Ghosh, Ragnar, and List discussed balanced growth in terms of maintaining balance between industry and agriculture, consumption and investment, and domestic versus foreign trade. Balanced growth is argued to promote inclusive, balanced regional development through specialization and creation of infrastructure, but critics note the challenges of coordinated planning and resource constraints in developing countries.
New growth theory emphasizes that economic growth results from increasing returns associated with new knowledge, rather than diminishing returns to capital and labor. It views technological progress as endogenous and driven by economic forces like investment in research and development, rather than external factors. This challenged previous neoclassical growth models that treated technology as outside the economic system. New growth theory sparked renewed interest in explaining the sources of long-term economic growth.
The Lewis dual sector model of development describes an economy transitioning from subsistence agriculture to a more modern, urbanized structure. It consists of two sectors: a traditional subsistence sector with zero marginal productivity of labor, providing surplus labor; and a modern industrial sector where labor is transferred from the traditional sector, expanding output and employment through reinvested profits. However, the model is criticized for assuming profits are always reinvested when they could enable labor-saving investments or capital flight, and for assuming perfect competition in labor markets and unlimited surplus labor, which is inconsistent with historical evidence from developing countries.
Lewis proposed that less developed countries could stimulate growth by exploiting their unlimited supplies of labor. His model assumes these countries have high populations engaged in subsistence work, making labor perfectly elastic at that wage. The economies are dual, with a subsistence sector employing most workers at low productivity and a capitalist sector using capital. Growth occurs as labor moves from subsistence to capitalist sectors, increasing output and allowing reinvestment which further raises productivity and employment in a self-sustaining cycle until labor pressures subside. Bank credit can also aid capital formation though inflation is self-correcting. Critics argue the model overlooks demand factors and difficulties transitioning large agricultural populations.
This document provides an overview of the AK model of endogenous economic growth. It discusses how the AK model addresses limitations of previous exogenous growth models. The key aspects of the AK model are:
- It models economic output as a linear function of capital stock, without diminishing returns to capital.
- This allows for perpetual long-run growth, unlike exogenous models which predict convergence to a steady state.
- The growth rate depends on savings rate and the level of technology, represented by the parameter A. Improvements in A can permanently increase the growth rate.
The Harrod-Domer model theorizes that a country's economic growth rate is defined by its savings level and capital-output ratio. It suggests there is no natural balanced growth. The model was developed independently by Roy Harrod and Evsey Domar to explain growth in terms of savings and capital productivity. It requires continuous net investment to sustain real income and production growth. The model's assumptions include no government intervention, full initial employment, a closed economy, fixed capital-labor ratios and constant savings and interest rates. Its main criticism is the unrealistic assumption of no reason for sufficient growth to maintain full employment.
The theory of balanced growth proposes that simultaneous investments should be made across multiple industries in order to spur economic development. This would enlarge the market and incentivize more investment. Theorists like Lewis, Ghosh, Ragnar, and List discussed balanced growth in terms of maintaining balance between industry and agriculture, consumption and investment, and domestic versus foreign trade. Balanced growth is argued to promote inclusive, balanced regional development through specialization and creation of infrastructure, but critics note the challenges of coordinated planning and resource constraints in developing countries.
This document provides an overview of Paul Krugman's new trade theory, which focuses on intra-industry trade driven by increasing returns to scale and imperfect competition. It discusses how intra-industry trade has become a large part of trade between industrialized nations as technology and resources have become more similar. Economies of scale, both internal and external, can lead to imperfect competition and influence patterns of trade. The theory of monopolistic competition is introduced to model trade driven by differentiated products and economies of scale. Trade integration creates a larger world market, allowing for more production scale, lower prices, and greater product variety compared to autarky.
In economics, the theory of the second best concerns the situation when one or more optimality conditions cannot be satisfied.
The economists Richard Lipsey and Kelvin Lancaster showed in 1956, that if one optimality condition in an economic model cannot be satisfied, it is possible that the next-best solution involves changing other variables away from the values that would otherwise be optimal.
Politically, the theory implies that if it is infeasible to remove a particular market distortion, introducing a second (or more) market distortion may partially counteract the first, and lead to a more efficient outcome.
This document summarizes Ricardo's theory of economic growth. It states that growth occurs through capital accumulation fueled by profits. However, as growth proceeds, wages and rents increase which squeeze profits. Eventually profits fall to zero, halting further investment and growth, reaching a stationary state. The stationary state can be avoided through international trade that imports corn, preventing rising domestic corn prices from cutting into profits.
The Harrod-Domar model of economic growth extends Keynesian analysis to the long run by considering the dual effects of investment on aggregate demand and productive capacity. It seeks to determine the unique growth rate of investment and income needed to maintain full employment. The Domar version presents a fundamental growth equation showing that the increase in national income depends on the increase in capital stock multiplied by the marginal output-capital ratio. Harrod's model treats growth more dynamically, with the warranted growth rate determined by the population growth rate, output per capita based on investment level, and capital accumulation. Equilibrium is achieved when the actual incremental capital-output ratio equals the required ratio warranted by technology.
This document summarizes Harrod's growth model, which argues that steady economic growth is inherently unstable due to entrepreneurs' inability to accurately predict the warranted rate of growth. It outlines Harrod's key assumptions and shows how the actual growth rate diverging from the warranted rate leads to boom/bust cycles. The model concludes that full employment steady growth is impossible to achieve due to exogenous factors like savings, technology, and population growth being rigid over time.
1. The document discusses the theories of balanced and unbalanced economic growth. It describes Rosenstein-Rodan's "big push" theory of balanced growth, which argues for coordinated investment across multiple industries to generate demand.
2. Nurkse's version of balanced growth stresses balancing investment between sectors to avoid bottlenecks. Hirschman's theory of unbalanced growth proposes strategically investing in certain industries to stimulate growth in other sectors through linkages.
3. Hirschman categorized investment as either social overhead capital or direct productive activities and argued that underdeveloped countries should initially focus on one type, which would then stimulate the other.
The Harrod-Domar growth model uses 3 key variables to determine the growth rate:
1. The saving rate, which determines how much can be invested.
2. Capital productivity, or how much output increases with each unit of new capital.
3. The depreciation rate, which accounts for aging of the existing capital stock.
The model's formula is: Growth Rate = Saving Rate x Capital Productivity - Depreciation Rate. It provides a simple framework for analyzing how changes to these variables impact long-term economic growth.
Lewis proposed a model of economic development where a developing economy consists of two sectors: a subsistence agricultural sector and a capitalist industrial sector. Workers move from the agricultural sector with zero marginal productivity to the industrial sector with higher productivity. This increases profits in the industrial sector, fueling expansion and absorbing more agricultural workers. Eventually, wages rise in the agricultural sector as well. However, capitalist profits may not be reinvested as assumed, and other assumptions like constant wages are questionable. Overall, Lewis sought to explain how economies develop by transforming their economic structure and increasing savings and investment rates.
Rostow's theory of economic growth outlines 5 stages of development:
1. The traditional society, characterized by agricultural economies with little change.
2. Preconditions for take-off including increased investment, nationalism, and new technology.
3. The take-off stage where industrialization occurs rapidly over 20-30 years through sectors like manufacturing emerging.
4. The drive to maturity where economies become self-sustaining through industrial skills and technology over 60 years.
5. The age of high mass consumption where economies focus on services and social welfare with high consumption levels.
Meeting 4 - Stolper - Samuelson theorem (International Economics)Albina Gaisina
The document discusses the Stolper-Samuelson theorem, which states that a decrease in the price of a good will lead to a decrease in the return to the factor that is used intensively in the production of that good. It will conversely lead to an increase in the return to the other factor. The theorem is based on assumptions of perfect competition and factor mobility. It predicts that increased trade with developing countries likely contributed to rising wage inequality in skilled countries. While trade increases overall welfare, it benefits some factors more than others according to their intensity of use.
The classical growth theory argues that economic growth will decrease or end because of an increasing population and limited resources Classical growth theory economists believed that temporary increases in real GDP per person would cause a population explosion that would consequently decrease real GDP.
1. The document discusses endogenous growth models and their representation of economic growth processes.
2. It addresses issues with decreasing marginal returns in endogenous growth models and introduces the Jones critique of these models.
3. Semi-endogenous growth models and the Jones model are presented as alternatives that account for decreasing marginal returns to R&D over time.
The Big Push Theory proposes that developing countries require a minimum threshold of investment across multiple industries to overcome issues of indivisibilities and break out of poverty. It identifies three types of indivisibilities: in production due to infrastructure needs, in demand due to small markets, and in savings due to high investment requirements. The theory argues for coordinated investment in social overhead capital and multiple industries to realize increasing returns to scale. However, it has been criticized for not providing clear guidance and overlooking constraints faced by developing countries.
Rostow's Stages of Economic Growth model outlines five stages of modernization:
1. Traditional Society, dominated by subsistence activities.
2. Preconditions for Take-off, where entrepreneurs begin money-making industries and infrastructure improves.
3. Take-off, marked by rapid economic growth as the economy transitions from traditional to modern.
4. Drive to Maturity, a long period of rising living standards through increased technology and economic diversification.
5. High Mass Consumption, where incomes exceed basics and demand grows for additional consumer goods and services.
This document outlines the structural theory of inflation in less developed countries. It discusses how structural defects and bottlenecks exist in these economies that cause inflation, making the traditional quantity theory of money not applicable. Three main types of bottlenecks are described: agricultural bottlenecks due to issues like land ownership that limit food production growth; government resource constraints that force them to print money to fund infrastructure projects leading to inflation; and foreign exchange bottlenecks from low exports and high import payments causing currency devaluations and price increases. The structural theory argues these bottlenecks must be addressed through balanced investment instead of just monetary or demand-side policies to effectively reduce inflation in less developed economies.
The document summarizes David Ricardo's theory of comparative advantage from 1817. It explains that Ricardo formalized the idea that countries can benefit from trade even if one country is more productive in all areas. Ricardo used a numerical example to show that if countries specialize in their comparative advantage goods, where their productivity is relatively higher, then total production can increase. The theory assumes differences in productivity across countries and industries and argues countries should allocate resources to comparative advantage industries to maximize global output through specialization and trade.
The theory of Technical dualism is one of the theories of dualism. Professor Higgins has developed the theory of Technological Dualism. By this, he means: "The use of different production functions in the advance sector and in the traditional sectors of UDCs".
The big push theory argues that economic development requires a minimum level of comprehensive investment in mutually supporting industries to take advantage of economies of scale and externalities. It identifies three types of indivisibilities - in production, demand, and savings - that must be overcome through a large investment package rather than gradual increases. Social overhead capital, like infrastructure, requires huge initial investments but leads to lower costs and indirect contributions to development over the long term. Underdeveloped countries face challenges achieving the necessary savings levels for a big push and must rely on outside sources.
Joan Robinson developed growth models that rejected many neoclassical assumptions. Her models considered capital as durable and heterogeneous, not easily substitutable for labor. She argued the value of capital depends on distribution and cannot be estimated without knowing interest rates. Robinson built multiple models to analyze growth under different economic conditions. Her key model showed the relationship between the actual and desired rates of accumulation and profit. Steady growth required these rates to be equal, but various factors could cause them to diverge, making sustained steady growth difficult to achieve.
El documento presenta la misión y visión de la Institución Educativa Julio Caicedo y Téllez de Santiago de Cali. Su misión es proporcionar elementos a los estudiantes para afianzar valores a través de la promoción de derechos humanos, medio ambiente y convivencia pacífica. Su visión es ser reconocida en 2015 por procesos que generan cambio y crecimiento en la comunidad educativa con formación integral y laboral de los estudiantes.
Este documento describe un experimento para validar transformaciones QVT que generan modelos de servicios SoaML a partir de modelos de procesos de negocio BPMN2. El experimento evaluó la adecuación y la entendibilidad de los modelos SoaML generados. Los resultados mostraron que el 82% de los participantes estuvieron de acuerdo con los diseños SoaML generados y el 75% respondieron correctamente preguntas sobre los diagramas SoaML, validando las transformaciones QVT.
This document provides an overview of Paul Krugman's new trade theory, which focuses on intra-industry trade driven by increasing returns to scale and imperfect competition. It discusses how intra-industry trade has become a large part of trade between industrialized nations as technology and resources have become more similar. Economies of scale, both internal and external, can lead to imperfect competition and influence patterns of trade. The theory of monopolistic competition is introduced to model trade driven by differentiated products and economies of scale. Trade integration creates a larger world market, allowing for more production scale, lower prices, and greater product variety compared to autarky.
In economics, the theory of the second best concerns the situation when one or more optimality conditions cannot be satisfied.
The economists Richard Lipsey and Kelvin Lancaster showed in 1956, that if one optimality condition in an economic model cannot be satisfied, it is possible that the next-best solution involves changing other variables away from the values that would otherwise be optimal.
Politically, the theory implies that if it is infeasible to remove a particular market distortion, introducing a second (or more) market distortion may partially counteract the first, and lead to a more efficient outcome.
This document summarizes Ricardo's theory of economic growth. It states that growth occurs through capital accumulation fueled by profits. However, as growth proceeds, wages and rents increase which squeeze profits. Eventually profits fall to zero, halting further investment and growth, reaching a stationary state. The stationary state can be avoided through international trade that imports corn, preventing rising domestic corn prices from cutting into profits.
The Harrod-Domar model of economic growth extends Keynesian analysis to the long run by considering the dual effects of investment on aggregate demand and productive capacity. It seeks to determine the unique growth rate of investment and income needed to maintain full employment. The Domar version presents a fundamental growth equation showing that the increase in national income depends on the increase in capital stock multiplied by the marginal output-capital ratio. Harrod's model treats growth more dynamically, with the warranted growth rate determined by the population growth rate, output per capita based on investment level, and capital accumulation. Equilibrium is achieved when the actual incremental capital-output ratio equals the required ratio warranted by technology.
This document summarizes Harrod's growth model, which argues that steady economic growth is inherently unstable due to entrepreneurs' inability to accurately predict the warranted rate of growth. It outlines Harrod's key assumptions and shows how the actual growth rate diverging from the warranted rate leads to boom/bust cycles. The model concludes that full employment steady growth is impossible to achieve due to exogenous factors like savings, technology, and population growth being rigid over time.
1. The document discusses the theories of balanced and unbalanced economic growth. It describes Rosenstein-Rodan's "big push" theory of balanced growth, which argues for coordinated investment across multiple industries to generate demand.
2. Nurkse's version of balanced growth stresses balancing investment between sectors to avoid bottlenecks. Hirschman's theory of unbalanced growth proposes strategically investing in certain industries to stimulate growth in other sectors through linkages.
3. Hirschman categorized investment as either social overhead capital or direct productive activities and argued that underdeveloped countries should initially focus on one type, which would then stimulate the other.
The Harrod-Domar growth model uses 3 key variables to determine the growth rate:
1. The saving rate, which determines how much can be invested.
2. Capital productivity, or how much output increases with each unit of new capital.
3. The depreciation rate, which accounts for aging of the existing capital stock.
The model's formula is: Growth Rate = Saving Rate x Capital Productivity - Depreciation Rate. It provides a simple framework for analyzing how changes to these variables impact long-term economic growth.
Lewis proposed a model of economic development where a developing economy consists of two sectors: a subsistence agricultural sector and a capitalist industrial sector. Workers move from the agricultural sector with zero marginal productivity to the industrial sector with higher productivity. This increases profits in the industrial sector, fueling expansion and absorbing more agricultural workers. Eventually, wages rise in the agricultural sector as well. However, capitalist profits may not be reinvested as assumed, and other assumptions like constant wages are questionable. Overall, Lewis sought to explain how economies develop by transforming their economic structure and increasing savings and investment rates.
Rostow's theory of economic growth outlines 5 stages of development:
1. The traditional society, characterized by agricultural economies with little change.
2. Preconditions for take-off including increased investment, nationalism, and new technology.
3. The take-off stage where industrialization occurs rapidly over 20-30 years through sectors like manufacturing emerging.
4. The drive to maturity where economies become self-sustaining through industrial skills and technology over 60 years.
5. The age of high mass consumption where economies focus on services and social welfare with high consumption levels.
Meeting 4 - Stolper - Samuelson theorem (International Economics)Albina Gaisina
The document discusses the Stolper-Samuelson theorem, which states that a decrease in the price of a good will lead to a decrease in the return to the factor that is used intensively in the production of that good. It will conversely lead to an increase in the return to the other factor. The theorem is based on assumptions of perfect competition and factor mobility. It predicts that increased trade with developing countries likely contributed to rising wage inequality in skilled countries. While trade increases overall welfare, it benefits some factors more than others according to their intensity of use.
The classical growth theory argues that economic growth will decrease or end because of an increasing population and limited resources Classical growth theory economists believed that temporary increases in real GDP per person would cause a population explosion that would consequently decrease real GDP.
1. The document discusses endogenous growth models and their representation of economic growth processes.
2. It addresses issues with decreasing marginal returns in endogenous growth models and introduces the Jones critique of these models.
3. Semi-endogenous growth models and the Jones model are presented as alternatives that account for decreasing marginal returns to R&D over time.
The Big Push Theory proposes that developing countries require a minimum threshold of investment across multiple industries to overcome issues of indivisibilities and break out of poverty. It identifies three types of indivisibilities: in production due to infrastructure needs, in demand due to small markets, and in savings due to high investment requirements. The theory argues for coordinated investment in social overhead capital and multiple industries to realize increasing returns to scale. However, it has been criticized for not providing clear guidance and overlooking constraints faced by developing countries.
Rostow's Stages of Economic Growth model outlines five stages of modernization:
1. Traditional Society, dominated by subsistence activities.
2. Preconditions for Take-off, where entrepreneurs begin money-making industries and infrastructure improves.
3. Take-off, marked by rapid economic growth as the economy transitions from traditional to modern.
4. Drive to Maturity, a long period of rising living standards through increased technology and economic diversification.
5. High Mass Consumption, where incomes exceed basics and demand grows for additional consumer goods and services.
This document outlines the structural theory of inflation in less developed countries. It discusses how structural defects and bottlenecks exist in these economies that cause inflation, making the traditional quantity theory of money not applicable. Three main types of bottlenecks are described: agricultural bottlenecks due to issues like land ownership that limit food production growth; government resource constraints that force them to print money to fund infrastructure projects leading to inflation; and foreign exchange bottlenecks from low exports and high import payments causing currency devaluations and price increases. The structural theory argues these bottlenecks must be addressed through balanced investment instead of just monetary or demand-side policies to effectively reduce inflation in less developed economies.
The document summarizes David Ricardo's theory of comparative advantage from 1817. It explains that Ricardo formalized the idea that countries can benefit from trade even if one country is more productive in all areas. Ricardo used a numerical example to show that if countries specialize in their comparative advantage goods, where their productivity is relatively higher, then total production can increase. The theory assumes differences in productivity across countries and industries and argues countries should allocate resources to comparative advantage industries to maximize global output through specialization and trade.
The theory of Technical dualism is one of the theories of dualism. Professor Higgins has developed the theory of Technological Dualism. By this, he means: "The use of different production functions in the advance sector and in the traditional sectors of UDCs".
The big push theory argues that economic development requires a minimum level of comprehensive investment in mutually supporting industries to take advantage of economies of scale and externalities. It identifies three types of indivisibilities - in production, demand, and savings - that must be overcome through a large investment package rather than gradual increases. Social overhead capital, like infrastructure, requires huge initial investments but leads to lower costs and indirect contributions to development over the long term. Underdeveloped countries face challenges achieving the necessary savings levels for a big push and must rely on outside sources.
Joan Robinson developed growth models that rejected many neoclassical assumptions. Her models considered capital as durable and heterogeneous, not easily substitutable for labor. She argued the value of capital depends on distribution and cannot be estimated without knowing interest rates. Robinson built multiple models to analyze growth under different economic conditions. Her key model showed the relationship between the actual and desired rates of accumulation and profit. Steady growth required these rates to be equal, but various factors could cause them to diverge, making sustained steady growth difficult to achieve.
El documento presenta la misión y visión de la Institución Educativa Julio Caicedo y Téllez de Santiago de Cali. Su misión es proporcionar elementos a los estudiantes para afianzar valores a través de la promoción de derechos humanos, medio ambiente y convivencia pacífica. Su visión es ser reconocida en 2015 por procesos que generan cambio y crecimiento en la comunidad educativa con formación integral y laboral de los estudiantes.
Este documento describe un experimento para validar transformaciones QVT que generan modelos de servicios SoaML a partir de modelos de procesos de negocio BPMN2. El experimento evaluó la adecuación y la entendibilidad de los modelos SoaML generados. Los resultados mostraron que el 82% de los participantes estuvieron de acuerdo con los diseños SoaML generados y el 75% respondieron correctamente preguntas sobre los diagramas SoaML, validando las transformaciones QVT.
The document describes several public-private partnership projects in New Jersey. It begins by describing AeroFarms' new corporate headquarters and world's largest indoor vertical farm in Newark, which was constructed through a partnership between AeroFarms, Hollister Construction Services, and other groups. It then briefly summarizes several other projects, including Campus Town at The College of New Jersey, a student housing complex developed through a partnership between the college and PRC Group; and a residential property in Fanwood developed by Community Access Unlimited to serve individuals with disabilities.
El documento trata sobre el concepto y tipos de comercio. Explica que el comercio es una actividad social y económica que implica la compra y venta de productos o servicios a cambio de dinero. También describe las diferentes formas de comercio como el minorista, mayorista, interior, exterior, terrestre, marítimo y electrónico. Además, analiza cómo las innovaciones en el transporte han impactado el comercio a lo largo de la historia.
Hoy en dia las redes sociales son la principal fuente de comunicación a nivel mundial, ya que por su cantidad de usuarios registrados, podes conocer gente nueva, y amigos que tengas en tu vida personal.
Todo esto tiene sus beneficios, pero también tiene sus contras, el caso de la gente pervertida, virus, etc.
Este documento describe las características de las organizaciones del nuevo paradigma Co en comparación con las organizaciones tradicionales. Las organizaciones Co se basan en espacios hiperconectados que integran la cultura, adoptan enfoques de procesos como el Design Thinking, y promueven la co-opetencia y la creación de valor compartido sobre la competencia. Además, utilizan modelos de propiedad intelectual como Creative Commons, financiamiento colectivo y trueque, en lugar de enfoques tradicionales más restrictivos.
Este documento describe las gráficas estadísticas como representaciones claras y precisas de tablas de datos numéricos y alfanuméricos. Proporciona dos ejemplos de gráficas: un diagrama de barras que muestra las edades de 8 niñas, y un histograma que representa las edades de 6 personas.
Naya Clarke is a 23-year-old solo artist from South East London who formed a band in school but now performs solo. She got signed to Columbia Records in 2014 after they saw one of her London gigs. The marketing team has created a logo, audience profile, mood board, and animatic for a new music video. The video's narrative will follow Naya through a day-to-night journey that ends where it began, mirroring the song's theme that her efforts are "all in vain."
Finding weaknesses and increasing salesPaul Randall
Some practical tips for increasing sales (or leads) on your websites by finding the weaknesses that already exist. Not a talk on blanket CRO hacks, but discovering issues that your customers are experiencing right now.
Este documento presenta una introducción a las normas APA y describe los formatos adecuados para títulos, tablas, citas textuales y referencias. Explica que los títulos no deben escribirse en mayúscula sostenida y detalla cinco niveles de encabezados con diferentes formatos. Además, indica que las tablas deben ser claras y comprensibles para el lector, y menciona brevemente las reglas para citas y referencias.
Elena Gilabert is a Spanish woman who currently works as an assistant. She enjoys helping others and finds her work rewarding. In her free time, Elena likes to spend time with friends, go to the beach, and cook new recipes in her kitchen.
Este documento describe las capacidades y beneficios de un software de gestión de ideas y planificación de proyectos. Permite visualizar, organizar y compartir información de manera gráfica mediante mapas mentales. Facilita la gestión del trabajo a través de herramientas como diagramas de Gantt. Representar ideas de forma visual ayuda a ahorrar tiempo, mejorar la comprensión y planificar de manera más efectiva.
Microsoft Dynamics CRM es una herramienta de software CRM desarrollada por Microsoft que proporciona una base de datos compartida de clientes y comunicaciones para que todos los departamentos tengan acceso a información actualizada de clientes. Viene en dos ediciones y permite integrar contactos, correos electrónicos, tareas, citas y más. Está diseñado para ejecutarse en Windows Server 2008 y proporciona interfaces web e de Outlook personalizables.
Este documento proporciona 10 recomendaciones para mejorar la seguridad de una computadora personal. Estas incluyen desinstalar Internet Explorer, instalar un antivirus y programa contra spyware, mantener solo las aplicaciones utilizadas, realizar limpiezas periódicas del disco y registro, usar un cortafuegos, contar con programas para recuperar archivos borrados, monitorear puertos, actualizar programas continuamente.
1) O estudo realizou um inventário de 201 produtos agrícolas utilizados na região do Baixo Jaguaribe e Litoral de Aracati no Ceará, compreendendo 151 ingredientes ativos.
2) A partir das propriedades físico-químicas desses ingredientes ativos, o estudo diagnosticou que de 13,2% a 36,4% dos ingredientes avaliados são potenciais contaminantes dos recursos hídricos subterrâneos da região.
3) O estudo também revelou quais são os agrotóxicos mais abund
Este documento presenta un examen de mantenimiento y prueba técnica sobre conceptos básicos de hardware y software de computadoras. El examen contiene 7 preguntas múltiples sobre temas como las generaciones de ordenadores, definiciones de hardware y software, componentes de una computadora y diferencias entre tipos de memoria como RAM y ROM.
Este documento describe un proyecto para fortalecer el interés ecológico en los niños de quinto grado de una escuela en Colombia. El proyecto utiliza encuestas y diarios de campo para evaluar los conocimientos y actitudes de los estudiantes hacia el medio ambiente antes y después de implementar actividades de educación ambiental con los estudiantes y sus familias.
The document is a critical analysis of musculoskeletal disorders among construction workers submitted for a Bachelor of Engineering degree. It includes an abstract, table of contents, introduction on MSDs, company profile of the construction site studied, problem definition, literature review on MSD risk factors and effects, methodology used for the study including data collection tools, data analysis, and conclusions and scope for future work.
K1108346 Working as an Economist EC6001 EssayRadoslav Velyov
This document provides an overview of innovation and theories of innovation. It discusses types of innovation including radical and incremental innovation. It describes Joseph Schumpeter's theory that innovation is driven by entrepreneurs and economic selection. Nelson and Winter's evolutionary theory that firms develop routines is also examined. The document analyzes how innovation occurs through a process of mutation and selection. It provides the example of Apple to illustrate how firms innovate.
1. The document presents a model exploring the relationship between entrepreneurship and economic growth. It argues that existing growth models focus too heavily on R&D expenditure and do not account for growth in countries with little R&D like China, or lack of growth in countries with high R&D like Japan.
2. The model distinguishes between two types of entrepreneurs - research-based entrepreneurs who incur R&D costs and imitative entrepreneurs who replicate existing technologies without R&D costs. It shows that a high number of imitative entrepreneurs can generate growth even with low R&D expenditure.
3. The model helps explain growth in emerging economies focusing on imitation rather than original innovation. It suggests entrepreneurship,
Rethinking the Framework for Production - MTI Future Tense 2012Hawyee Auyong
This paper is a think-piece which reflects on current thinking on the economic model of production, and considers how a better understanding of the intangible input factors of production as well as the driving forces of the production process may support sustainable economic growth.
1. Growth refers to the rise in goods and services an economy produces, while productivity is the output per unit of input.
2. Key sources of economic growth include investment and capital accumulation, available resources, compatible institutions, technological advances, and entrepreneurship.
3. Modern growth theories emphasize the role of technological progress rather than capital accumulation, highlighting how technology can overcome diminishing returns through mechanisms like learning by doing.
Growth theory began with Solow (1956) and Swan (1956) formalizing an economic growth framework. Later models endogenized technical progress, including Arrow (1962) on learning by doing, Lucas (1988) on human capital accumulation, and Romer (1990) on R&D-driven innovation. The book provides an overview of these models and extensions, examining issues like the role of public policy, demographics, money, and sustainable development. It aims to demonstrate how growth theory tools can be applied to answer different economic questions.
Institutions, entrepreneurship and channels to sustained economic growth jan ...Carlos H. Brandt
This document presents a model that integrates insights from literature on institutions, entrepreneurship, and economic growth. [1] It builds on North's work on institutions to model how institutions determine people's effort allocation between productive and unproductive activities. [2] The model incorporates Schumpeter's ideas about entrepreneurship and tools variety driving technological progress. [3] It shows how institutions and entrepreneurship interact to determine the long-run growth rate through their effects on tools variety and technical progress. The model provides a framework for understanding sustained economic growth across countries and over time.
This paper examines the impact of entrepreneurship as a linkage to economic growth. It discusses how knowledge is a driver of economic growth according to new growth theory. Entrepreneurs increase knowledge by introducing new products and variations, speeding up innovation. Starting a business allows opportunities from underexploited knowledge to be commercialized. The paper argues that entrepreneurship has impacted economic growth since Adam worked in the Garden of Eden, and continues to do so by discovering new sources of supply and creating new organizations. Overall, the paper concludes that entrepreneurship has positively impacted economic growth by increasing income and productivity over time.
The Execution Plan For Hitachi Global InnovationEbony Bates
Hitachi is a large Japanese electronics company seeking to increase innovation and speed up its response to market demands. The document discusses Hitachi's culture and the need to facilitate a more sustainable and innovative culture through diversity, creative thinking, collaboration, and risk-taking. It suggests Hitachi cannot force change its subsidiaries' cultures but should draw on their strengths and promote cultural alignment through shared mission, values and goals under strong leadership. This will help improve Hitachi's innovation capabilities.
The document discusses national innovation systems and analyzes the United Arab Emirates' system. It begins by providing background on the UAE's economy and Abu Dhabi's strategy to decrease dependence on fossil fuels. The document then reviews literature on national innovation systems and their key components. It analyzes the national innovation systems of 5 countries and identifies gaps in the UAE's system. Strategies are suggested to enhance the UAE's national innovation system.
61520, 256 PMGlobal Innovation and Intellectual Property.docxBHANU281672
6/15/20, 2:56 PMGlobal Innovation and Intellectual Property
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12.1 Innovation as a Tool for Global Growth
LEARNING OBJECTIVE
Identify three types of innovation that can fuel global growth.
Over 93 percent of global executives rate innovation as a key driver of organic global growth. More importantly, research
shows that around 85 percent of a company's productivity gains are related to R&D and other innovation-related
investments.
Innovation is the commercialization of new invention. However, many innovations do not necessarily build on new
inventions. An invention is a new concept or product that derives from ideas or from scientific research. Innovation, on the
other hand, is the combination of new or existing ideas to create something desired by customers, viable in the
marketplace, and possible with technology (see Figure 12.1).
Figure 12.1Primary components of innovation
The inputs used to innovate could be new inventions or they could be old ideas. For example, Henry Ford didn't invent the
automobile. Karl Benz from Germany did. However, Ford combined scientific management concepts with the automobile
production process to build automobiles more efficiently (Figure 12.2). This innovation built on existing inventions to
usher in a new industry with the scale to meet demand.
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6/15/20, 2:56 PMGlobal Innovation and Intellectual Property
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Figure 12.2Innovation in the auto industryCarl Benz of Mercedes Benz invented the automobile (left). Henry Ford of Ford
Motor Company innovated by combining ideas on assembly lines with car production (right).
Most global managers struggle to get people in their companies to innovate. So far, no one has created a formula or model
that reliably leads companies to increased innovation. Some management approaches are helpful, but none is perfect. As
Dr. Brian Junling Li, vice president of Alibaba Group, puts it, “Innovation doesn't come from organized plans. It comes
from our preparedness to deal with the uncertainty of the future.” To understand how global companies can effectively
deal with the uncertainties of the future, we first need to examine the different types of innovation in which companies can
invest.
Three Kinds of Innovation
Different types of innovation have different implications for company growth. Based on those implications, we can
organize innovations into three types: those that improve performance, those that enhance efficiency, and those that create
a market.
Performance-improving innovations replace old products with upgraded models. Often, the improvements in these models
are consistent worldwide. Performance-improving innovations keep a company growing because they provide .
The content of this PPT is not owned by me and I give credits to the book where I get the content of this report. This is uploaded for the benefit of students taking Economic Eevelopment subject.
Suh Num Pyo (KAIST) - Theory Of InnovationIlya Ponomarev
This document presents a theory of innovation proposed by Nam Pyo Suh. The theory consists of three laws of innovation: 1) All steps of the innovation continuum must be present for innovation to occur, 2) An innovation hub can form if its initial size exceeds a critical threshold and the activation barrier is overcome, and 3) The rate of innovation nucleation must exceed the rate of diffusion of innovative ideas. The theory is analogous to principles governing natural systems and can inform government policy to stimulate economic growth through innovation. Two case studies are presented to support the theory.
This study examines the relationship between cosmetic companies' yearly research and development expenditure and revenue growth over 20 years. The author collected data on the top 10 cosmetic companies from 1995-2015 and found a moderately strong positive correlation between changes in R&D spending and revenue growth. This suggests that increased investment in R&D is linked to increased revenue growth in the cosmetic industry.
Financial and Institutional Reforms for an Entrepreneurial SocietyDr Lendy Spires
This document introduces a special issue on financial and institutional reforms needed to transition Europe to a more entrepreneurial society. It summarizes the key findings and contributions of the 12 papers in the issue, which address different facets of Europe's entrepreneurial ecosystem including access to knowledge, financial resources, labor markets, and how institutions and entrepreneurship drive economic growth. The papers find that Europe needs more fundamental reforms to improve its entrepreneurial ecosystem compared to past approaches. Access to knowledge, financial resources, and labor are particularly important for supporting more startups and challengers that drive innovation and economic growth through creative destruction.
This document discusses the concepts of technological change, invention, innovation, and diffusion. It defines technological change as the process involving invention, innovation, and spreading of new technologies. Invention is the initial creation of a new technology, while innovation is the process of improving and applying inventions. Diffusion is how innovations spread through industries and societies over time, typically following an S-curve pattern. The document outlines models of this technological change process and discusses factors like relative advantage, compatibility, and observability that influence the adoption of new innovations.
This document summarizes an article titled "Increasing Returns and Long-Run Growth" by Paul M. Romer. It proposes an alternative model of long-run economic growth where knowledge, rather than physical capital, is the main driver of growth. Knowledge exhibits increasing marginal returns in production but decreasing returns in research and development. This allows for perpetual economic growth without limits in a competitive market equilibrium framework. The model overturns conventional assumptions that growth rates decrease and countries converge over time by introducing externalities from new knowledge and increasing rather than diminishing returns to knowledge accumulation.
This document summarizes an article titled "Increasing Returns and Long-Run Growth" by Paul M. Romer. It proposes an economic growth model where knowledge is assumed to have increasing marginal productivity, unlike standard models that assume diminishing returns. The key aspects of the model are: 1) Knowledge exhibits increasing returns in production but decreasing returns in creation; 2) Knowledge spillovers create externalities; 3) The model can generate unbounded long-run growth without exogenous technological change. The model aims to explain how long-run growth rates may increase over time and initial conditions can have permanent effects, challenging standard neoclassical assumptions.
Production improvement function and equity capital of firms in the nigerian m...Alexander Decker
This document summarizes a study that investigated the impact of production improvement functions on the equity capital of manufacturing firms in Nigeria. The study surveyed 62 manufacturing firms listed on the Nigerian stock exchange. It found that production planning and control have a significant positive impact on enhancing equity capital, while production scheduling alone has an insignificant influence. This implies that effectively implementing production improvement functions, including aspects like planning and control, can help boost productivity and the equity capital of manufacturing firms in Nigeria. The study recommends that Nigerian manufacturers operationalize production improvement strategies to restore the industry and support economic development.
Production improvement function and equity capital of firms in the nigerian m...Alexander Decker
This document summarizes a study that investigated the impact of production improvement functions on the equity capital of manufacturing firms in Nigeria. The study surveyed 62 manufacturing firms listed on the Nigerian stock exchange. It found that production planning and control have a significant positive impact on enhancing equity capital, while production scheduling alone has an insignificant influence. This implies that effectively implementing production improvement functions, including aspects like planning and control, can help boost productivity and the equity capital of manufacturing firms in Nigeria. The study recommends that Nigerian manufacturers operationalize production improvement strategies to restore the industry and support economic development.
Similar to The New Theory of Economic Growth: Endogenous Growth Model (20)
Use PyCharm for remote debugging of WSL on a Windo cf5c162d672e4e58b4dde5d797...shadow0702a
This document serves as a comprehensive step-by-step guide on how to effectively use PyCharm for remote debugging of the Windows Subsystem for Linux (WSL) on a local Windows machine. It meticulously outlines several critical steps in the process, starting with the crucial task of enabling permissions, followed by the installation and configuration of WSL.
The guide then proceeds to explain how to set up the SSH service within the WSL environment, an integral part of the process. Alongside this, it also provides detailed instructions on how to modify the inbound rules of the Windows firewall to facilitate the process, ensuring that there are no connectivity issues that could potentially hinder the debugging process.
The document further emphasizes on the importance of checking the connection between the Windows and WSL environments, providing instructions on how to ensure that the connection is optimal and ready for remote debugging.
It also offers an in-depth guide on how to configure the WSL interpreter and files within the PyCharm environment. This is essential for ensuring that the debugging process is set up correctly and that the program can be run effectively within the WSL terminal.
Additionally, the document provides guidance on how to set up breakpoints for debugging, a fundamental aspect of the debugging process which allows the developer to stop the execution of their code at certain points and inspect their program at those stages.
Finally, the document concludes by providing a link to a reference blog. This blog offers additional information and guidance on configuring the remote Python interpreter in PyCharm, providing the reader with a well-rounded understanding of the process.
Advanced control scheme of doubly fed induction generator for wind turbine us...IJECEIAES
This paper describes a speed control device for generating electrical energy on an electricity network based on the doubly fed induction generator (DFIG) used for wind power conversion systems. At first, a double-fed induction generator model was constructed. A control law is formulated to govern the flow of energy between the stator of a DFIG and the energy network using three types of controllers: proportional integral (PI), sliding mode controller (SMC) and second order sliding mode controller (SOSMC). Their different results in terms of power reference tracking, reaction to unexpected speed fluctuations, sensitivity to perturbations, and resilience against machine parameter alterations are compared. MATLAB/Simulink was used to conduct the simulations for the preceding study. Multiple simulations have shown very satisfying results, and the investigations demonstrate the efficacy and power-enhancing capabilities of the suggested control system.
Electric vehicle and photovoltaic advanced roles in enhancing the financial p...IJECEIAES
Climate change's impact on the planet forced the United Nations and governments to promote green energies and electric transportation. The deployments of photovoltaic (PV) and electric vehicle (EV) systems gained stronger momentum due to their numerous advantages over fossil fuel types. The advantages go beyond sustainability to reach financial support and stability. The work in this paper introduces the hybrid system between PV and EV to support industrial and commercial plants. This paper covers the theoretical framework of the proposed hybrid system including the required equation to complete the cost analysis when PV and EV are present. In addition, the proposed design diagram which sets the priorities and requirements of the system is presented. The proposed approach allows setup to advance their power stability, especially during power outages. The presented information supports researchers and plant owners to complete the necessary analysis while promoting the deployment of clean energy. The result of a case study that represents a dairy milk farmer supports the theoretical works and highlights its advanced benefits to existing plants. The short return on investment of the proposed approach supports the paper's novelty approach for the sustainable electrical system. In addition, the proposed system allows for an isolated power setup without the need for a transmission line which enhances the safety of the electrical network
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The aquaponic system of planting is a method that does not require soil usage. It is a method that only needs water, fish, lava rocks (a substitute for soil), and plants. Aquaponic systems are sustainable and environmentally friendly. Its use not only helps to plant in small spaces but also helps reduce artificial chemical use and minimizes excess water use, as aquaponics consumes 90% less water than soil-based gardening. The study applied a descriptive and experimental design to assess and compare conventional and reconstructed aquaponic methods for reproducing tomatoes. The researchers created an observation checklist to determine the significant factors of the study. The study aims to determine the significant difference between traditional aquaponics and reconstructed aquaponics systems propagating tomatoes in terms of height, weight, girth, and number of fruits. The reconstructed aquaponics system’s higher growth yield results in a much more nourished crop than the traditional aquaponics system. It is superior in its number of fruits, height, weight, and girth measurement. Moreover, the reconstructed aquaponics system is proven to eliminate all the hindrances present in the traditional aquaponics system, which are overcrowding of fish, algae growth, pest problems, contaminated water, and dead fish.
DEEP LEARNING FOR SMART GRID INTRUSION DETECTION: A HYBRID CNN-LSTM-BASED MODELgerogepatton
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The New Theory of Economic Growth: Endogenous Growth Model
1. International Journal of Business and Management Invention
ISSN (Online): 2319 – 8028, ISSN (Print): 2319 – 801X
www.ijbmi.org || Volume 5 Issue 9 || September. 2016 || PP—50-53
www.ijbmi.org 50 | Page
The New Theory of Economic Growth: Endogenous Growth
Model
Dr. Satyabrata Mishra
Associate Prof. and HOD P.G. Department of Environmental Economics, M.P.C. (A) College, Takhatpur,
Baripada, Mayurbhanj, Odisha
I. INTRODUCTION
For increasing returns not only the capital but also the labour must expand. K.J. Arrow assumes
knowledge as a side product of investment. Ideas are essential for the growth of an economy. It has been proved
by Japan’s rapid economic growth despite very little natural resources. Japan did this miracle due to open
exposure to western ideas, import of modern machines from US and manufacturing of better prototypes of
machines.
The Lucas Model is based on the assumption that investment on education leads to production of
human capital which is a crucial determinant in the growth process. The new growth theory also emphasizes the
role of private sector in technological research and development. The combination of recent endogenous growth
theories and neo-classical growth model will provide the best framework for understanding the determinants of
economic growth.
Research on economic growth was very active from the late 1950s through the 1960s. The work
through the 1960s produced the “neo-classical growth model”, which is a core-conceptual framework used now
by most economists. The model stresses the accumulation of capital, broadly defined as a source of growth. An
important predication of this model is convergence, thatis, a tendency for poor economics to catch up to rice
ones. However, the model is less interesting in its predictions about long-run economic growth, which depends
entirely on unexplained factors, especially the exogenous rate of technological progress.
Economic growth became a vigorous are of research again in the late 1980s, propelled by a new line of
theory that focused on the origins of the technological change. The work stressed that technological advance
amounted to the creation of new ideas, which differed from standard inputs to production became ideas could be
used freely by any numbers of producers. This idea meant that some kind of monopoly power over new products
or processes-that is, a type of imperfect competition was necessary for motivating the discovery of better
technologies. Numerous model with these features are described as endogenous growth models because they
determine within model the rate of technological change and, hence the economy long terms growth rate. The
new theory of economic growth is an endogenous growth model is one in which the long run growth rate of an
economy on the basis of endogenous factors, not an exogenous factors as in a neo classical growth model like
those following from Ramsey, R.M. Solow, T.W. Swan, Cass Koopmans.
In the Solow-Swan Model, the growth rate does not depend upon the saving rate, in the position of
steady state both output per worker and capital per worker being constant, the growth rate is not affected by the
saving rate. As the long run growth depended on exogenous factors, the neo classical theory had few policy
implications. As pointed out by Paul Romer, “In models with exogenous technical change and exogenous
population growth it never really muttered what the government did", The new growth theory docs not simply
criticize the neo-classical growth theory. Rather, it extends the latter by introducing endogenous technical
progress in growth models. The endogenous growth models have been developed by Kenith J. Arrow, Paul
Romer, Lucas and other economists. This new theories are based on the following assumptions:
There, are many firms in a market, knowledge or technological advance is a non-rival good, there are
increasing returns to scale to all factors taken together and constant returns to a single factor, at least for one,
Technological advance is based on the creation of new ideas, it assumes constant marginal product of capital at
the aggregate level or at least, that the limit or the marginal product of capital does not tend towards zero, many
individuals and firms have market power and earn profit from their discoveries. This assumption arises from
increasing, returns to scale in production that leads to imperfect competition.
These are models with two sectors, produces of final output and R&D sector. The R&D sector
develops ideas that they are granted a monopoly over. R&D firms are assumed to be able to make monopoly
profit selling ideas to production firms, hut the free entry condition means that these profits are dissipated on
R&D spending.
2. The New Theory Of Economic Growth: Endogenous Growth Model
www.ijbmi.org 51 | Page
II. ARROW'S "LEARNING BY DOING" MODEL
K. J. Arrow (1962) was the first economists to introduce the concept of learning by doing in 1962 by
regarding it as endogenous in the growth process. He 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 ill investment but rather with the absolute level of knowledge
already accumulated. Because Arrow claimed that the new machines are improved and more productive
versions of those in existence, investment does not only induce productivity growth of labour on existing capital
(as Kaldor would have it), but it would also improve the productivity of labour upon all subsequent machines
made in the economy.
The trick is to utilize the concept that while firms face constant returns, the industry or economy as a
whole takes increasing returns to account.
This can be easily formalized. Taking the Cobb - Douglas production function y=AKa
Ll-a
there is
constant returns to scale for all inputs together (Since a+ (l-a) =l). Therefore, as noted the Solow model it might
seem as if output per capital and consumption per capita does not grow unless the exogenous factor, A, grows
too. To endogenizeA, let us first establish the Cobb-Douglas production function for each individual firm:
yi= Ai Ki
a
Li
i-a
Where, one can note the output of an individual firm is related with capital, labour as well as the
augmentation factor, might thus written look specific to the firm, but it is in fact related to knowledge in the
economy. This knowledge and experiences Arrow argued, is common to all firms.
So the first question is how knowledge is accumulated. Arrow argued that it arises from past
cumulative investment of all firms.
Let us call this cumulative investment G. Thus, Arrow assumed that the technical augmentation factor
is related to economy wide aggregate capital in a process of “learning by doing”. In other words, the experience
of particular firm is related to the stock of total capital in the economy, G, by the function:
Ai=Gz
Thus, as the physical capital stock G accumulates, knowledge used by a particular firm also accumulate
by a proportion Z such that 0<1. Transferring to the production function for an individual firm, then:
yi = GZ
Ki
a
Li
i-a
Where, note only G does not have a subscript I, (i.e. is not particular to the firm), it is a productive
force external to the firms (i.e. a Marshallian externality) and assumed a free public good. This force is free and
any firm employing it will not implicate on another firm’s consumption: it is freely-available knowledge. But in
the aggregate, however, G = K. since it is only the accumulated stock of capital for the economy. Therefore the
“economy wide” aggregate production function is:
Y = Ka+z
Ll-a
Arrow (1962) assumed that a-z <1.
Therefore, increasing only capital (or only labour) does not lead increasing returns. We can obtain
increasing returns to scale as a+z+(l-a) = “z”>0, but capital and labour must both expand. However, by adding
this restriction, Arrow's original model exhibits non-increasing returns to scale in aggregate if the rate of growth
in an economy is steady.
Romer (1986) presented a variant on Arrow's model which is known as learning b investment. He
assumes creation of knowledge as a side product of investment, He takes knowledge as an input in the
production function of the following form
Y=A (R) F (Ri, Ki, Li)
Where y is aggregate output: A is the public stock of knowledge from research and development R, Ri
is the stock of results tram expenditure on research and development b firm i; and Ki and Li are capital stock
and labour stock of firm respectively. He assumes the function F homogeneous of degree one in all its inputs Ri,
Ki and Li and treats Ri as a rival good.
In this model three key elements include by Romer namely externalities, increasing returns in the
production of output and diminishing returns in the production of ne knowledge. According to Romer, it is
spillover from research efforts by a firm that leads to the creation of new knowledge by other firms. In other
words, new research technology by a firm spillover instantly across the entire economy.
In his model, new knowledge is the ultimate determinant of long-run growth which is determined by
investment in research technology. Research technology exhibits diminishing returns which means that
investments in research technology will not double knowledge. The other firms also make use of the new
3. The New Theory Of Economic Growth: Endogenous Growth Model
www.ijbmi.org 52 | Page
knowledge due to the inadequacy of patent protection and increase their production. Thus the production of
goods from increased knowledge displays increasing return and competitive equilibrium is consistent with
increasing aggregate returns owing to externalities. Thus Rorner takes investment in research technology as
endogenous factor in terms of the acquisition of new knowledge by rational profit maximization firms.
Further Romer presented model of Endogenous Technical Change of 1990 identifies a research sector
specializing in the production of ideas. This sector invokes human capital along with the existing stock of
knowledge to produce idea or new knowledge. According to Romer, ideas are more important than natural
resources. He cites the example of Japan which has very few natural resources but it was open to new western
ideas and technology. It imported machines from the United States, dismantled then to see how they worked and
manufactured their better prototypes. Therefore, ideas are essential for the growth of an economy. These idea
relate to improved designs for the productive of producer durable goods for final production.
In the model, new knowledge enters into the production process in three ways. A new design is used in
the intermediate goods sector for the production of a new intermediate input. In the final sector, labour, human
capital and available producer durables produce the final product. And a new design increases the total stock of
knowledge which increase the productivity of human capital employed ill the research sector.
The Romer model is based on the following assumptions:
1. Economic growth comes from technological change.
2. Technological change is endogenous.
3. Market incentives play an important role in making technological changes available to the economy.
4. Invention of a new design requires a specified amount of human capital.
5. The aggregate supply of human capital is fixed.
6. Knowledge or a new design is assumed to be partially excludable and retainable by the firm which invented
the new design. It means that if an inventor has a patented design for a machine, no one can make or sell it
without the agreement of the inventor. On the other hand, other inventors are free to spend time to study the
patented design for the machine and acquire knowledge that helps in the design of such a machine. Thus
patents provide incentives to firms to engage in research and development and other firms can also benefit
from such knowledge. When there is partial excludability, investment in research and development leading
to an invention by a firm can only bring in quasi-rent.
7. The new design can be used by firm and in different periods without additional cost and without reducing
the value of the input.
8. It is also assumed that the low cost of using an existing design reduces the cost of creating new designs.
9. When firms make investments on research and development and invent a new design, there are externalities
that are internalized by private agreements.
Romer can be explained in terms of the following technological production function.
ΔA = F (KA, HA, A)
ΔA is the increasing technology F is the production function for technology. K, amount of capital
invested in producing the new design, HA is the amount of human capital employed in R&D of the new design.
A, is the existing technology of designs.
The production function shows that technology is endogenous when more human capital is employed
for research and development of new designs then technology increases by a larger amount i.e. ΔA is greater. If
more capital is invested in research laboratories and equipment to invent the new design then technology also
increases by a larger amount i.e.>A is more further the existing technology, A also leads to the production of
new technology, >A. Since it is assumed that technology is a non-rival input and partially excludable, there are
positive spillover effects of technology which can be used by other firms. Thus the production of new
technology can be increased through the use of physical capital, human capital and existing technology.
III. THE LUCAS MODEL
In Lucas Model, Lucas assumes that investment on education leads to the production of human capital
which is the crucial determinant in the gross process. He makes a distinction between the internal effects of
human capital where the individual worker undergoing training becomes more productive and external effects
which spillover and increase the productivity of capital and of other workers in the economy. It is investment in
human capital rather than physical capital that have spillover effects that increase the level of technology.
In the Lucas model, each firm faces constant returns to scale, while there are increasing returns for the
whole economy. Further, learning by doing or on the job training and spillover effect involve human capital.
Each firm benefits from the average level of human capital in the economy, rather than from the aggregate of
human capital. Thus it is not the accumulated knowledge or experience of other firms but the average level of
skills and knowledge in the economy that are crucial for economic growth. In the model technology is
endogenously provided as a side effect of investment decisions by firms. Technology is treated as a public good
4. The New Theory Of Economic Growth: Endogenous Growth Model
www.ijbmi.org 53 | Page
from the point of view of its users. As a result, firms can be treated as price takers and there can be equilibrium
with many firms as under perfect competition.
Critical Evaluation of Endogenous growth theory:
Despite the fact that new growth theory has been regarded as an improvement over the neo classical
growth theory still. It has many critics.
According to Scott and Auerbach, the main ideas of the new growth theory can be traced to Adam Smith
and increasing returns to Marx’s analysis.
To, Olson, the new growth theory lays too much emphasis on the role of human capital and neglects the
role of institutions.
In the various models of new growth theory the difference between physical capital and human capital is
not clear. For instance, in Romer’s model capital goods are the key to economic growth. He assumes that
human capital accumulates and when it is embodied in physical capital then it becomes a driving force. But
he does not clarify which is the driving force.
One of the main failings of these theories is the collective failure to explain non convergence. That is, to
explain why some countries are still much richer than other. It is widely felt that new growth theory has
proven no more successful than exogenous growth theory in explaining the income divergence between the
developing and developed worlds.
According to Solow, “The idea of endogenous growth so captures the imagination that growth theorists
often just insert favorable assumption in an unearned way and then when they put in their thumb and pull out the
very plum they have inserted, there is a tendency to think that something has been proved. It may not be
generally recognized how restrictive [the assumption of constant returns to capital] is. The conclusion has to be
that this version of the endogenous growth model is very un-robust. It cannot survive without exactly constant
returns to capital. But you would have to believe in the tooth fairy to expect that kind of luck”.
IV. CONCLUSION
According to Grossman and Help man and Puck, The new growth theories are useful in a more
academic way. They have shown that potentially developing countries stand to gain more from trade with
developed countries by drawing upon new knowledge, research and development and new technologies of
developed countries. This is possible with openness in trade which further offers opportunities to firms to
participate in international capital markets for 1inalldllg investment.
The new growth theory emphasizes the role of private firms for investment in technological research
and development. But external increasing returns in such cases will be too low. Therefore, public policy can be
more effective in making large provision for making investments in creating human capital and on research and
development of new knowledge. This call helps to increase the rate of accumulation of both physical and human
capital and thus the long-run growth rate of developing countries.
Lucas favours subsidies by the state or schooling in developing countries because investment in
education has a spillover effect on the productivity of other people. He also advocates incentives to such firms
which invest more on research and development of new technologies.
In contrast, empirical analysis has thus far been less successful in verifying the importance of the recent
endogenous growth theories, notably their implications for technological progress.
Hence, we will ultimately find that some combination of the recent endogenous growth theories with
the neo-classical growth model will provide the best framework for understanding the determinants of economic
growth.
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