A primer on innovation and growth

Philippe Aghion emphasises that for Europe to stimulate innovation and growth, it is not enough to increase spending on research and development and the protection of intellectual property.

Growth, Development, and Technological Change

The theory of endogenous technical change has deeply contributed to our understanding of the fundamental sources of economic growth and development. In this chapter we survey important contributions in the field by focussing on the basic structure of endogenous growth models with horizontal as well as vertical innovation and emphasizing important implications for growth policy. We address issues like the scale effect problem, directed technological change to understand the evolution of wage inequality, long-run divergence between the innovating North and the imitating South due to inappropriate technology in the South, the relationship between trade and growth, competition and R&D, and the role of imperfect capital markets for R&D-based growth.endogenous technical change, economic growth, horizontal innovations, scale effects, vertical innovations

Economic Growth and Technological Change

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Microeconomic policy and technological change

Economic policy ; Research and development ; Microeconomics ; Technology

The Spatial Hierarchy of Technological Change and Economic Development in Europe

This paper discusses the possibility of a spatial hierarchy of innovation and growth dynamics in Europe. A spatial hierarchy is understood as a geographical clustering of regions, where important differences exist in terms of innovation and growth dynamics between the clusters. The literature on regional growth and innovation is briefly scanned. After this, a database on European regional growth and innovation dynamics is presented. Spatial correlation analysis and spatial principal components analysis are used to explore the possibility of a spatial hier-archy in Europe. The results point to a hierarchy consisting of four groups: South Europe, East Europe, and two groups in West and North Europe. Growth and innovation performance in these clusters is discussed, and some policy conclusions are drawn.Technological Change, Economic Development, Europe, Geographical Distribution, Government Policy

Democratization is the determinant of technological change

The purpose of this paper is to analyze the relationship between democracy and technological innovation. The primary findings are that most free countries, measured with liberal, participatory, and constitutional democracy index, have higher technological innovation than less free and more autocratic countries, so that the former have a higher interaction among social, economic and innovation systems with fruitful effects on economic growth and the wealth of nations. In fact “democracy richness” in these countries displays a higher rate of technological innovation. In addition, democratization is an antecedent process (cause) to technological innovation (effect), which is a major wellknown determinant of economic growth. These findings lead to the conclusion that policy makers need to be cognizant of positive association between democratization and technological innovation to sustain modern economic growth and future technological progress in view of the accelerating globalization.Democratization, Technological Innovation, Patents, Royalty Licenses Fee, Economic Grow

No Green Growth Without Innovation

This Policy Brief, co-written by Senior Non-Resident Fellow Philippe Aghion, Senior Resident Fellow Reinhilde Veugelers and David Hemous of Harvard University, attempts to change the terms of the debate surrounding climate change policy. The authors argue that policymakers should do more to encourage innovation and investment in Â?greenÂ? research and development rather than focusing solely on the setting of a carbon price. Using a model developed by Aghion in a previous paper, they argue that a carbon price would have to be about 15 times higher in the first five years and 12 times higher in the next five years if innovation is not properly subsidized by governments. The authors also provide several policy recommendations for incentivising this type of Â?green growthÂ? in the private sector.

Australia’s energy options: renewables and efficiency

The world is wrestling with the challenge of ensuring an ongoing supply of energy that does not damage the environment while enabling billions of people to appreciate the benefits of modern life. Global interest in renewable technologies is accelerating the maturity of many of these energy sources. These efforts are vital if the quality of human life is to be improved across the planet without causing its further degradation. Energy underpins all aspects of modern life and generates many externalities that affect both the environment and society more broadly, such as the environmental consequences of extracting the raw materials used in all energy generation. All forms of energy generation create externalities, although not all have an influence on the climate. Numerous policies have been established to adjust for climatic externalities in the energy generation and to incentivise low carbon emission sources of energy. There is a complex interplay between technological and economic factors influencing the deployment of renewable technologies, the relative cost of generating energy from different sources, and the broader political and economic cycles. Given how fundamental reliable energy is for modern life the costs involved in mitigating climate change are substantial. The scale of change requires examining public policy outcomes throughout the world to ensure that interventions are producing effective results in Australia.   Related identifier: ISBN 0 85801 280

Growth, development, and technological change

The theory of endogenous technical change has deeply contributed to our understanding of the fundamental sources of economic growth and development. In this chapter we survey important contributions in the field by focussing on the basic structure of endogenous growth models with horizontal as well as vertical innovation and emphasizing important implications for growth policy. We address issues like the scale effect problem, directed technological change to understand the evolution of wage inequality, long-run divergence between the innovating North and the imitating South due to inappropriate technology in the South, the relationship between trade and growth, competition and R&D, and the role of imperfect capital markets for R&D-based growth

Financial Innovation and Endogenous Growth

We model technological and financial innovation as reflecting the decisions of profit maximizing agents and explore the implications for economic growth. We start with a Schumpeterian endogenous growth model where entrepreneurs earn monopoly profits by inventing better goods and financiers arise to screen entrepeneurs. A novel feature of the model is that financiers also engage in the costly, risky, and potentially profitable process of innovation: Financiers can invent more effective processes for screening entrepreneurs. Every existing screening process, however, becomes less effective as technology advances. Consequently, technological innovation and, thus, economic growth stop unless financiers continually innovate. Historical observations and empirical evidence are more consistent with this dynamic model of financial innovation and endogenous growth than with existing models of financial development and growth.Invention, Economic Growth, Corporate Finance, Financial Institutions, Technological Change, Entrepreneurship.