Abstract. I use U.S. manufacturing industry data to estimate a system of three equations implied by a model of R&D‐induced growth in steady state. These equations relate R&D intensity to patenting, patenting to technological progress, and technological progress to economic growth. In each case, I find evidence of positive impact. Thus, I reject the null hypothesis that growth is not induced by R&D in favour of the Schumpeterian endogenous growth framework without scale effects. I also find strong support for technological spillovers from aggregate research intensity to industry‐level innovation success. JEL Classification: O40, O30
It is necessary to have psychological and social requirements for regional development in the same way as economic needs. The reason for this is that political, social, cultural, religious and economic trends have a combined effect on national investment policy. The economic development of a country basically depends on how strong is the desire of the people to adopt new values and institutions. Technological innovations have special significance in the path of regional development.
"This paper proposes a tractable model to study the equilibrium diversity of technological progress and shows that equilibrium technological progress may exhibit too little diversity (too much conformity), in particular, foregoing socially beneficial investments in "alternative" technologies that will be used at some point in the future. The presence of future innovations that will replace current innovations imply that social benefits from innovation are not fully internalized. As a consequence, the market favors technologies that generate current gains relative to those that will bear fruit in the future; current innovations in research lines that will be profitable in the future are discouraged because current innovations are typically followed by further innovations before they can be profitably marketed. A social planner would choose a more diverse research portfolio and would induce a higher growth rate than the equilibrium allocation. The diversity of researchers is a partial (imperfect) remedy against the misallocation induced by the market. Researchers with different interests, competences or ideas may choose non-profit maximizing and thus more diverse research portfolios, indirectly contributing to economic growth"--National Bureau of Economic Research web site
We analyze the implications of innovation and social interactions on economic growth in a stylized endogenous growth model with heterogeneous research firms. A large number of research firms decide whether to innovate or not, by taking into account what competitors (i.e., other firms) do. This is due to the fact that their profits partly depend on an externality related to the share of firms which actively engage in research activities. Such a share of innovative firms also determines the evolution of technology in the macroeconomy, which ultimately drives economic growth. We show that when the externality effect is strong enough multiple BGP equilibria may exist. In such a framework, the economy may face a low growth trap suggesting that it may end up in a situation of slow long-run growth; however, such an outcome may be fully solved by government intervention. We also show that whenever multiple BGP exist, they are metastable meaning that the economy may cyclically fluctuate between the low and high BGP as a result of shocks affecting the individual behavior of research firms.
Under the utilitarian justification for the patent system, patents advance overall well-being by promoting technological progress. As patents incentivize innovation through the grant of market exclusivity, market demand has a leading role in directing innovation. The reliance on market demand reflects a choice of preference satisfaction as the criterion of well-being underlying the patent system. Accordingly, the concept of technological progress that the patent system is set to promote is rather simplistic. It includes those future goods that current market participants would value the most, or in other words: new stuff that sells. This Article deviates from this conventional account of technological progress that governs the field. It criticizes the reliance on preference satisfaction and the ensuing equation between market value and social value. Drawing on philosophical literature and empirical studies in economics and psychology, this Article reveals the shortcomings of the preference satisfaction criterion of well-being, and demonstrates that an innovative product's high-market demand does not guarantee that it will significantly enhance overall well-being. Ultimately, by incentivizing the development of certain innovations with a relatively low social value, the patent system might divert resources away from other, more beneficial, activities. To better align incentives with social value, this Article contends that innovation law and policy should be predicated on an objective criterion of well-being rather than on preference satisfaction. By holding that certain things are intrinsically valuable for people, an objective criterion allows a shift away from a view of technological progress as an end in itself to a view of technological progress as a means to enable better lives.This new perspective entails a more significant role for the state in directing innovation.On a prescriptive level, the proposed approach mandates assigning greater weight to various schemes of direct government funding of innovation, including prizes and grants, as well as certain revisions within patent law itself.
