Science in the Third Dimension of R&D

Attar, Mustafa A. (2008): Science in the Third Dimension of R&D.

Abstract

We study a Schumpeterian model of long-run growth with endogenous fertility and with three interacting dimensions of innovation. Scientific research is the fundamental dimension of innovation that creates new technological knowledge. This is allocated over new working prototypes in the horizontal dimension. New firms finance scientific research by obtaining the property rights of new working prototypes, and existing firms invest in developing the blueprint mode of working prototypes into the more productive modes of production in the vertical dimension. Balanced growth in the standards of living is fully endogenous without scale effects, and a new parameter, i.e., the elasticity of scientific knowledge with respect to existing collective scientific knowledge, nonlinearly accelerates long-run growth. With exogenous population growth, the model generates a semi-endogenous result due to the endogenously determined bound on technological opportunity.

• Item Type: MPRA Paper
• Language: English
• Keywords: Science; Technology; Blueprints; R&D; Endogenous Fertility
• Subjects: O - Economic Development, Innovation, Technological Change, and Growth > O4 - Economic Growth and Aggregate Productivity > O41 - One, Two, and Multisector Growth Models; O - Economic Development, Innovation, Technological Change, and Growth > O3 - Innovation ; Research and Development ; Technological Change ; Intellectual Property Rights > O33 - Technological Change: Choices and Consequences ; Diffusion Processes; O - Economic Development, Innovation, Technological Change, and Growth > O3 - Innovation ; Research and Development ; Technological Change ; Intellectual Property Rights > O31 - Innovation and Invention: Processes and Incentives

References

Aghion, P., and Howitt, P. (1992), "A Model of Growth Through Creative Destruction", Econometrica, 60, pp. 323-51.

Aghion, P., and Durlauf, S. N. (eds), Handbook of Economic Growth, Amsterdam: Elsevier, 2005.

Arrow, K. J. (1962), "The Economic Implications of Learning By Doing", Review of Economic Studies, 29, pp. 155-73.

Bacon, F., The New Organon (1620), Cambridge, UK: Cambridge University Press, 2004.

Barro, R. J., and Sala-i-Martin, X., Economic Growth, Cambridge, MA: MIT Press, 1998.

Becker, G. S., and Barro, R. J. (1988), "A Reformulation of the Economic Theory of Fertility", Quarterly Journal of Economics, 103, pp. 1-25.

Comin, D. (2004), "R&D: A Small Contribution to Productivity Growth", Journal of Economic Growth, 9, pp. 391-421.

Cozzi, G., and Spinesi, L. (2004), "Information Transmission and the Bounds to Growth", Topics in Economic Analysis & Policy, 4(1), Article 6.

Connolly, M., and Peretto, P. F. (2003), "Industry and the Family: Two Engines of Economic Growth", Journal of Economic Growth, 8, pp. 115-48.

Dasgupta, P., and David, P. A. (1994), "Toward a new economics of science", Research Policy, 23, pp: 487-521.

Dinopoulos, E., and Thompson, P. (1998), "Schumpeterian Growth without Scale Effects", Journal of Economic Growth, 3, pp. 313-35.

Dixit, A. K., and Stiglitz, J. E. (1977), "Monopolistic Competition and Optimum Product Diversity", American Economic Review, 67, pp. 297-308.

Dosi, G. (1988), "Sources, Procedures, and Microeconomic Effects of Innovation", Journal of Economic Literature, 26, pp. 1120-71.

Foray, D., Economics of Knowledge, Cambridge, MA: MIT Press, 2004.

Gomulka, S., The Theory of Technological Change and Economic Growth, London: Routledge, 1990.

Grossman, G. M., and Helpman, E., Innovation and Growth in the Global Economy, Cambridge, MA: MIT Press, 1991.

Growiec, J. (2007), "Beyond the linearity critique: the knife-edge assumption of steady-state growth", Economic Theory, 31, pp: 489-99.

Hess, C., and Ostrom, E. (eds), Understanding Knowledge as a Commons: From Theory to Practice, Cambridge, MA: MIT Press, 2006.

Howitt, P. (1999), "Steady Endogenous Growth with Population and R&D Growing", Journal of Political Economy, 107, pp: 715-30.

Jones, C. I. (1995), "R & D-Based Models of Economic Growth", Journal of Political Economy, 103, pp. 759-84.

Kortum, S. S. (1997), "Research, Patenting, and Technological Change", Econometrica, 65, 1389-419.

Laincz, C. A., and Peretto, P. F. (2006), "Scale Effects in Endogenous Growth Theory: an error of aggregation not specification", Journal of Economic Growth, 11, pp. 263-88.

Lewis,W. A., The Theory of Economic Growth, London: Unwin Hyman, 1955.

Lucas, R. E., Jr. (1988), "On the Mechanics of Economic Development", Journal of Monetary Economics, 22, pp. 3-42.

Madsen, J. B. (2008), "Semi-endogenous versus Schumpeterian growth models: testing the knowledge production function using international data", Journal of Economic Growth, 13, pp. 1-26.

Merton, R. K. (1961), "Singletons and multiples in scientific discovery: A chapter in the sociology of science", Proceedings of the American Philosophical Society, 105, 470-86.

Merton, R. K., The Sociology of Science: Theoretical and Empirical Investigations, Chicago: University of Chicago Press, 1973.

Mokyr, J., The Gifts of Athena: Historical Origins of the Knowledge Economy, Princeton: Princeton University Press, 2002.

Nelson, R. R. (1982), "The Role of Knowledge in R&D Efficiency", Quarterly Journal of Economics, 97, pp. 453-70.

Olsson, O. (2000), "Knowledge as a Set in Idea Space: An Epistemological View on Growth", Journal of Economic Growth, 5, pp: 253-75.

Olsson, O. (2005), "Technological Opportunity and Growth", Journal of Economic Growth, 10, pp: 35-57.

Peretto, P. F. (1998a), "Technological Change and Population Growth", Journal of Economic Growth, 3, pp. 283-311.

Peretto, P. F. (1998b), "Technological Change, Market Rivalry, and the Evolution of the Capitalist Engine of Growth", Journal of Economic Growth, 3, pp. 53-80.

Peretto, P. F., and Smulders, S. A. (2002), "Technological Distance, Growth and Scale Effects", Economic Journal, 112, pp. 603-24.

Peretto, P. F., and Connolly, M. (2007), "The Manhattan Metaphor", Journal of Economic Growth, 12, pp: 329-50.

Romer, P. M. (1986), "Increasing Returns and Long-Run Growth", Journal of Political Economy, 94, pp. 1002-37.

Romer, P. M. (1990), "Endogenous Technological Change", Journal of Political Economy, 98, pp. S71-102.

Segerstrom, P. S. (1998), "Endogenous Growth without Scale Effects", American Economic Review, 88, pp. 1290-310. 32

Temple, J. (2003), "The Long-Run Implications of Growth Theories", Journal of Economic Surveys, 17, pp: 497-510.

Uzawa, H. (1965), "Optimum Technical Change in An Aggregative Model of Economic Growth", International Economic Review, 6, pp. 18-31.

Weitzman, M. L. (1998), "Recombinant Growth", Quarterly Journal of Economics, 113, pp. 331-60.

Young, A. (1998), "Growth without Scale Effects", Journal of Political Economy, 106, pp. 41-63.