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The recent development of endogenous growth theories has renewed the in­ terest into the sources of productivity growth of the advanced industrialized economies. The basic advance of these models is that the evolution of tech­ nological progress is explained endogeneously within the economic model. The most important concept is the idea of endogenous, market-driven inno­ vations which are seen as the basic source of technological advances. Firms develop sophisticated production techniques and new products in order to reduce costs or to stimulate demand. Equally important is the concept of knowledge spillovers from innovation activities and scale economies associ­ ated with them. External effects drive a wedge between private and social re­ turns of innovation activities, and scale economies affect the market structure. In addition, each year's productivity increases exhibit an enormous social value. Therefore, the analysis of endogenous innovations, scale economies, and knowledge spillovers has important implications for economic policy which enhances the interest into empirical investigations of these issues. This book is a collection of theoretical and empirical work on this subject. It combines micro economic and macroeconomic issues; a special emphasis is placed on empirical applications. Much work has been devoted to the search and the preparation of appropriate data, and all models are estimated with panel data. The first two chapters take an aggregate view at the growth process.

Inhaltsverzeichnis

Frontmatter

Introduction

Abstract
Endogenous innovations, knowledge spillovers, and scale economies at the aggregate level are important concepts in recent models of endogenous growth. From a theoretical perspective, they permit to understand technological change as being endogenously determined by the profit maximizing behaviour of competing firms within the economic system. From a welfare economic perspective, spillovers deserve special attention, since they indicate an inefficiency of a decentralized market system. If knowledge is distributed for free, as spillover models suggest, firms have too low incentive to engage in innovative activities, and the market outcome can be below the social optimum. From the viewpoint of economic policy, knowledge spillovers supply an argument in favour of a policy which promotes R&D and innovations, and spillovers across borders supply an argument in favour of a policy which stimulates international cooperation through trade and foreign direct investment. Finally, scale economies at the micro level are important aspects for regulation and antitrust laws.
Werner Smolny

1. Sources of productivity growth at the sectoral level

Abstract
“Technological advance has probably been the major influence on the nature of the lives that we lead relative to the lives that our forebears had and our children and grandchildren will have.”1
Werner Smolny

2. International sectoral spillovers

Abstract
“A key economic issue is whether poor countries or regions tend to grow faster than rich ones: are there automatic forces that lead to convergence over time in the levels of per capita income and product?”1
Werner Smolny

3. Innovations, prices, and employment

Abstract
“Research firms are motivated by the prospect of monopoly rents that can be captured when a successful innovation is patented. But those rents will be destroyed by the next innovation… ”1
Werner Smolny

4. Endogenous innovations in a model of the firm

Abstract
“… we believe that most technological progress requires, at least at some stage, an intentional investment of resources by profit-seeking firms or entrepreneurs.” 1
Werner Smolny

5. Sources of productivity growth at the firm level

Abstract
In this chapter, the sources of productivity growth are investigated by an empirical analysis with micro data for West-German manufacturing firms. The starting point of the study is the large residual left after standard procedures of growth accounting, i.e. standard growth models leave most of observed growth unexplained.1 A convenient way to deal with this discrepancy is to treat the residual as exogenous. However, nearly every information and a priori assessments about the sources of productivity increases would reject this approach. The incentives and the process of introducing productivity enhancements are not exogenous to the economic system, but have their origins in the intertemporal optimizing behaviour of competing firms; i.e. technological change evolves endogenously within the economic system.
Werner Smolny

Conclusions

Abstract
“The main contribution of the literature on endogenous growth pioneered by Romer (1986) and Lucas (1988) has been to endogenize the underlying sources of sustained growth in per-capita income, namely the accumulation of knowledge.”1
Werner Smolny

Backmatter

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