DOCSLIB.ORG

27 . Richard G. Lipsey,.Pdf

Total Page：16

File Type：pdf, Size：1020Kb

Download full-text PDF Read full-text

Load more

ECONOMIC TRANSFORMATIONS This page intentionally left blank Economic Transformations General Purpose Technologies and Long-Term Economic Growth RICHARD G. LIPSEY KENNETH I. CARLAW CLIFFORD T. BEKAR 1 3 Great Clarendon Street, Oxford ox2 6dp Oxford University Press is a department of the University of Oxford. It furthers the University’s objective of excellence in research, scholarship, and education by publishing worldwide in Oxford New York Auckland Cape Town Dar es Salaam Hong Kong Karachi Kuala Lumpur Madrid Melbourne Mexico City Nairobi New Delhi Shanghai Taipei Toronto With offices in Argentina Austria Brazil Chile Czech Republic France Greece Guatemala Hungary Italy Japan Poland Portugal Singapore South Korea Switzerland Thailand Turkey Ukraine Vietnam Oxford is a registered trade mark of Oxford University Press in the UK and in certain other countries Published in the United States by Oxford University Press Inc., New York ß Richard G. Lipsey, Kenneth I. Carlaw, and Clifford T. Bekar The moral rights of the authors have been asserted Database right Oxford University Press (maker) First published 2005 All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, without the prior permission in writing of Oxford University Press, or as expressly permitted by law, or under terms agreed with the appropriate reprographics rights organization. Enquiries concerning reproduction outside the scope of the above should be sent to the Rights Department, Oxford University Press, at the address above You must not circulate this book in any other binding or cover and you must impose the same condition on any acquirer British Library Cataloguing in Publication Data Data available Library of Congress Cataloging in Publication Data Data available Typeset by SPI Publisher Services, Pondicherry, India Printed in Great Britain on acid-free paper by Clays Ltd., St. Ives plc. 0-19-928564-0(hbk) 9780199285648 0-19-929089-x 9780199290895 13579108642 Contents . List of Figures ix . List of Tables x . List of Boxes xi . Foreword xii . Preface xv . Acknowledgements xxi Part I GROWTH, TECHNOLOGICAL CHANGE, AND GENERAL PURPOSE TECHNOLOGIES 1 . 1. Technology as Revolution 3 ? Pervasive Economic Change 4 ? Some Comments on Procedure and Method 16 ? A Preview 21 . 2. Two Views of Economic Processes 25 ? Comparisons and Contrasts 27 ? Functioning of the Market 36 ? Appendix: Technological Choices and Trajectories 50 . 3. A Structuralist-Evolutionary Decomposition 55 ? The S-E Decomposition 57 ? Incentives and Behaviour 65 ? Innovating and Non-Innovating Behaviour 68 ? Path Dependence and the Arrow of Time 77 ? Appendix: The Evolutionary Hand and Factor Substitution 83 . 4. Technology and Technological Change 85 ? Microeconomics of Technological Change 85 ? General Purpose Technologies 93 ? Is There a Testable GPT Theory? 105 ? How Do We Know a New GPT When We See One? 108 ? Appendix: Measuring Technological Change 119 _ An Overview of Total Factor Productivity 119 _ TFP and Costly Technological Change 120 _ Counterfactual Measures 129 . 5. A Survey of GPTs in Western History (Part A): 10,000 bc to ad 1450 131 ? Initial Conditions 134 ? An Evolving Hunter-Gatherer Society 136 vi Contents ? The Neolithic Agricultural Revolution 138 ? Writing 144 ? Bronze 151 ? Iron and Steel 155 ? Classical Technologies 159 ? The Medieval Agricultural Revolution 160 ? Waterwheel 164 . 6. A Survey of GPTs in Western History (Part B): 1450–2010 169 ? Three-Masted Sailing Ship 169 ? Printing 175 ? Steam Engine 182 ? Mechanization 189 ? Railways 190 ? Electricity 196 ? Three Organizational GPTs 203 ? Some Future Transforming GPTs 211 ? Omitted GPTs 216 ? Concluding Thoughts 218 Part II THE TRANSITION TO SUSTAINED ECONOMIC GROWTH IN THE WEST 219 . 7. The Emergence of Sustained Extensive Growth in the West 221 ? Introduction 221 ? Early Roots 225 ? The Early Modern Period 235 ? Four Phases of Industrial Mechanization 238 ? Growth Becomes Sustained 255 ? The Three Questions Answered 258 . 8. Why Not Elsewhere? 267 ? Why Not in Islam? 267 ? Why Not in China? 277 ? Conclusion 287 . 9. Population Dynamics: Relation Between Extensive and Intensive Growth 290 ? Growth Over the Millennia 291 ? Relation Between Extensive and Intensive Growth 297 ? Model 1: Individual Household 302 ? Model 2: Solow Growth with Endogenous Population 308 ? A Multi-Sector Model 319 ? Other Possible Determinants of Fertility 327 ? The Importance of Using a CES Production Function 328 ? What Have We Learnt? 332 ? Appendix 9.1: Historical Record on the Control of Family Size 335 Contents vii ? Appendix 9.2: Formal Models of Population Dynamics 341 _ Model 1: Individual Household 341 _ Model 2: A Solow Growth Model with Endogenous Population 343 _ Model 3: A Three-Sector Model 346 . 10. The Emergence of Sustained Intensive Growth in the West 351 ? Explanations 352 ? The Three Generic Theories Once Again 358 ? Conclusion and Summary 364 Part III MODELLING SUSTAINED GPT-DRIVEN GROWTH 367 . 11. GPTs and Related Concepts in the Literature 371 ? Historical and Appreciative Theories of GPTs 371 ? Growth With a Single GPT 379 ? Conclusions 384 . 12. Scale Economies in Economic Growth 385 ? Issues of Scale in Microeconomic Theory 386 ? ‘Scale’ Effects in Technological History 397 ? Scale Economies in Macro Growth Models 401 . 13. Appreciative Theories of GPTs 407 ? First Level of Abstraction: Adjustments of the S-E Categories 407 ? Second Level of Abstraction: A Stylized Evolution of a GPT 432 ? Third Level of Abstraction: A Logistic Curve Model of the Evolution of a GPT 434 . 14. Formal Models of GPT-Driven Sustained Growth: The Baseline Model 440 ? Outline of Our Baseline Model 440 ? Two-Sector Illustration of Growth Rejuvenation 445 ? The Three-Sector Baseline Model 449 ? Summary and Conclusion 465 . 15. Formal Models of GPT-Driven Sustained Growth: Extensions and Applications 468 ? Rational Versus Adaptive Expectations 468 ? Two Applied R&D and Consumption Sectors 475 ? More Than One Active GPT 477 ? A Simple Model of Facilitating Structure and GPTs 482 ? Changes in TFP Do Not Track Changes in Technology 488 ? Summary and Conclusions 495 Part IV POLICY 497 . 16. Technology Enhancement Policies: Theory and Evidence 499 ? Two Generic Theories 500 ? Policy Through Neoclassical Lenses 502 viii Contents ? Policy Through S-E Lenses 504 ? Free Trade Versus Protectionism 507 ? Domestic Technology Enhancement Policies 516 . 17. Assessing Technology Enhancement Policies 526 ? Judging Policy Packages 526 ? An S-E Package for Technology Policy 538 Bibliography 544 Index 559 List of Figures 2A.1 Substitution along a neoclassical isoquant 50 2A.2 Changing factor proportions under uncertainty 51 2A.3 Two alternative trajectories for technological change 52 2A.4 Alternative iso-R&D curves 53 3.1 The neoclassical aggregate production function 55 3.2 The structuralist-evolutionary decomposition 56 3A.1 Hidden hand selection of alternative technological trajectories 83 4A.1 Alternative time paths for the marginal product of capital 130 9.1 The household 305 9.2 A range of increasing returns to labour 330 12.1 Some stylized long-run average total cost curves for various types of manufacturing plants 405 13.1 Productivity/Applications curves for a GPT 433 13.2 Productivity/Applications curves for a succession of GPTs 437 13.3 Productivity curves for different patterns of two successive GPTs 438 14.1 Two-sector simulation: consumption output and knowledge stock 449 14.2 Two-sector simulation: resource allocation 449 14.3 Resource allocations (transition criterion 4) 462 14.4 Growth rates (transition criterion 4) 463 15.1 Resource allocations under rational and adaptive expectations (transition criterion 1) 472 15.2 Consumption paths under rational and adaptive expectations 473 15.3 Knowledge and consumption growth rates with simultaneous GPTs 482 15.4 Resource allocations with structural adjustment 486 15.5 Growth rates with structural adjustment 487 15.6 Rate of change of knowledge and TFP 491 15.7 Aggregate TFP and technological growth rates 492 15.8 Growth rates of knowledge and TFP with structural adjustment costs 494 17.1 The three stages of a programme 527 List of Tables 5.1 Transforming GPTs 132 16.1 Neoclassical and S-E theories compared 501 List of Boxes 9.1 The Galor and Weil model 299 9.2 Equations for the individual household (Model 1) 303 9.3 Equations for the one-sector model (Model 2) 309 9.4 Results for the one-sector model 312 9.5 Equations for the three-sector model (Model 3) 322 9.6 Results for the three-sector model 324 9.7 Equations for a range of increasing returns to labour 330 9A.2.1 Parameters with base case values in parentheses 349 10.1 The model altered to reflect the fertility revolution 357 12.1 An example of increasing returns to scale 393 12.2 Replication and decreasing returns for firms 399 14.1 A two-sector model that illustrates the growth rejuvenation process 446 14.2 Numerical simulation of the two-sector model 448 14.3 The three-sector model 455 14.4 Numerical simulation in a three-sector model 458 14.5 Maximization in the three-sector model 458 14.6 Spillovers from applied knowledge 464 15.1 Endogenous arrival and diffusion rates for new GPTs 470 15.2 Two applied R&D and consumption sectors 476 15.3 Two active GPTs 479 15.4 Parameter values for the simulation with two GPTs 481 15.5 A simple model of the facilitating structure and GPTs 483 15.6 Simulation of the three-sector and structural adjustment models 489 15.7 Measuring TFP in the three-sector baseline model 490 15.8 Measuring TFP in the model of the facilitating structure 493 16.1 Total factor productivity and technological change in the Asian NICs 515 Foreword THE CANADIAN INSTITUTE FOR ADVANCED RESEARCH AND THIS BOOK This book had its beginnings in 1988 when I was asked by the CIAR to set up a research programme on long-term economic growth.
Recommended publications
  • 1 Joseph Agassi, the Mt Seminar

    1 Joseph Agassi, the Mt Seminar

    JOSEPH AGASSI, THE M2T SEMINAR, AND HIS INFLUENCE ON MY WORK Forthcoming in Critical Rationalism at Work: Essays for Joseph Agassi on the occasion of his 90th birthday, Springer International 1 ABSTRACT This paper discusses the influence on my research and writings of several methodological principles that we, the members of the LSE Staff Seminar on Methodology, Measurement and Testing learned directly from Joseph Agassi and indirectly from Karl Popper. It begins with the origins of the seminar and my text book, An Introduction to Positive Economics. It goes on to cover methodological issues that arose in my subsequent papers including: the importance of having empirical content in economic theories, the poverty of theories that are built only to pass sunrise tests, why non-robust assumptions need to be tested, the concept of refutability, the fussy distinction between normative and positive statements, the impossibility of giving purely positive policy advice, the testing of existential statements, fallacious attempts to deduce empirical propositions from definitional identities, the distinction between internally and externally driven research programs, the poverty of modern welfare economics as a guide to policy and the possibility of deriving policy advice without such guidance. It concludes with a short discussion of the revolutionary implications of accepting technological change as being generated endogenously under conditions of genuine uncertainty rather than measurable risk. 2 I am a professional economist with only a rudimentary knowledge of some basic methodological principles. Most of these I learned from Joseph Agassi, either directly or through his friend and my colleague, Kurt Klappholz. I never met Karl Popper but, through Joseph, we were also introduced to many of Popper’s ideas.
  • Price Stability Versus Full Employment: the Phillips Curve Dilemma Reconsidered

    Price Stability Versus Full Employment: the Phillips Curve Dilemma Reconsidered

    Price Stability versus Full Employment: The Phillips Curve Dilemma Reconsidered Dipl. oec. Johannes A. Schwarzer 15. Mai 2016 Kumulative Dissertation zur Erlangung des akademischen Grades Dr. oec. Eingereicht an der Fakultät Wirtschafts- und Sozialwissenschaften der Universität Hohenheim am 4. Dezember 2015 Institut für Volkswirtschaftslehre (520H) Datum der mündlichen Promotionsleistung (Kolloquium): 23. März 2016 Erstgutachter: Prof. Dr. Harald Hagemann (Universität Hohenheim) Zweitgutachter: Prof. Dr. Hans-Michael Trautwein (Carl von Ossietzky Universität Oldenburg) Vorsitzender der Prüfungskommission: Prof. Dr. Heinz-Peter Spahn (Universität Hohenheim) Dekan der Fakultät Wirtschafts- und Sozialwissenschaften der Universität Hohenheim: Prof. Dr. Dirk Hachmeister Kontakt: [email protected] Price Stability versus Full Employment: The Phillips Curve Dilemma Reconsidered To Amrei Acknowledgements Although each paper included in this thesis features a separate acknowledgements section, many people and organisations helped me in diUerent ways during the whole research process. I would like to take the opportunity and express my gratitude to all those who contributed to this thesis. First and foremost my wife supported me throughout all the years for which I am deeply grateful. The supervisor of my thesis, Harald Hagemann, provided excellent advice and guidance in any stage of this dissertation. He also put me in contact with Robert Solow, who commented on the Samuelson-Solow paper included in this thesis. Harald Hagemann also introduced me to David Laidler, who always had most valuable remarks and who shared many contemporary experiences with me which cannot be found anywhere else. David Laidler also put me in con- tact with Richard Lipsey, Edward Nelson and Grant Reuber. Edward Nelson commented on the paper on Friedman’s view about the “cruel dilemma”.
  • Probing Leviathan an Investigation of Government in the Economy

    Probing Leviathan an Investigation of Government in the Economy

    Copyright the Fraser Institute www.fraserinstitute.org Copyright the Fraser Institute www.fraserinstitute.org Copyright the Fraser Institute www.fraserinstitute.org Probing Leviathan An Investigation of Government in the Economy Edited by: George Lermer Contributors: Thomas J. Courchene Herbert Grubel John L. Howard Richard G. Lipsey Rolf Mirus W T. Stanbury Copyright the Fraser Institute www.fraserinstitute.org Papers appearing in this volume were first presented at a conference sponsored by The School of Management, The University of Leth­ bridge, Lethbridge, Alberta, April 1 and 2, 1982. The School of Man­ agement gratefully acknowledges the financial support of the Burns Foods Endowment Fund. Canadian Cataloguing in Publication Data Main entry under title: Probing Leviathan Includes index. 1. Canada - Economic policy - 1971- 2. Canada - Economic condi­ tions - 1971- 3. Government spending policy - Canada. I. Lermer, George. II. Fraser Institute (Vancouver, B.C.) HC115.P762 1984 330.971 C84-091416-4 COPYRIGHT © 1984 by The Fraser Institute. All rights reserved. No part of this book may be reproduced in any manner whatsoever without written per­ mission except in the case of brief quotations embodied in critical articles and reviews. Printed in Canada. Copyright the Fraser Institute www.fraserinstitute.org CONTENTS FOREWORD, Michael A. Walker Vll PREFACE GOVERNMENT AND THE MARKET ECONOMY, George Lermer IX PART I Chapter 1 CAN THE MARKET ECONOMY SURVIVE? Richard G. Lipsey 3 I. What the Market Economy Does 3 II. The Case for the Market Economy 9 III. The Case for Intervention 13 IV. The Erosion of the Free Market 19 V. The Future of the Market Economy 28 Notes 35 References 36 Chapter 2 THE CITIZEN AND THE STATE: A MARKET PERSPECTIVE, Thomas J.
  • Tom Courchene Agenda.Cdr

    Tom Courchene Agenda.Cdr

    THINKING Outside THE BOX A Conference in Celebration of Thomas J. Courchene October 26 - 27, 2012 Hand - Purvis Conference Room, Dunning Hall THOMAS J. Courchene Thomas J. Courchene was born inWakaw, Saskatchewan, and was educated at the University of Saskatchewan (Honours BA, 1962) and Princeton University (Ph.D., 1967), with a post-doctoral year at the University of Chicago (1968-9). From 1965 to 1988 he was a Professor of Economics at the University of Western Ontario. Dr. Courchene spent the fall term of 1986 as a visiting Professor at Ecole nationale d’administration publique (Montreal). For the academic year 1987/88, he occupied the John P. Robarts Chair in Canadian Studies atYork University. In 1988, he accepted the Directorship of Queen’snew School of Policy Studies (1988-92). From 1992 until his retirement in 2012 Courchene held the Jarislowsky-Deutsch Professorship in Economics and Financial Policy at Queen’s, where he was a member of the Department of Economics, the School of Policy Studies and the Faculty of Law. He remains theSeniorScholarattheInstituteforResearchonPublicPolicyinMontreal,apositionhehasheldsince1999.HeservedasDirector of Queen’s John Deutsch Institute for the Study of Economic Policy from 1993-99 and from 2001-02 and as Director of Queen’s InstituteofIntergovernmentalRelationsfromJuly2006toFebruary2010. Courchene is the author or editor of some 60 books and has published some 300 academic papers on a wide range of Canadian public policy issues. Among the authored books are: a four volume series on Canadian monetary policy for the C.D. Howe Institute; In Praise of Renewed Federalism (C.D. Howe); Social Policy in the 1990s: Agenda for Reform (C.D.
  • Clearing the Wreckage, and Building Anew

    Clearing the Wreckage, and Building Anew

    Clearing the wreckage, and building anew A creative revolution spurred by new technology is the solution to Canada's industrial decay, argues economist Richard Lipsey GORDON PITTS GLOBE AND MAIL UPDATE JANUARY 12, 2009 AT 7:41 AM EST As one of Canada's iconic economists, Richard Lipsey wrote textbooks that unlocked the mysteries of the supply-demand curves for a generation of university students. As one of London's hottest TV directors, Matt Lipsey was part of the creative team behind the hilariously off- colour comedy hit, Little Britain. Matt is Richard's son - and one of the reasons the 80-year-old economist remains optimistic, despite the storms shaking the industrial core of the Canadian economy. Prof. Lipsey sees the dramatic decline in Canadian manufacturing as the onset of a potential 10-year restructuring similar to what hit Britain in the 1980s. "All the old manufacturing industries disappeared and it probably will happen in Ontario," he said from his home on Bowen Island, just off the coast from Vancouver. "It will be a profound change for the whole country." Yet Britain survived and so should Canada, he says. One phenomenon that replaced the decaying industrial foundation of Britain was the emergence of London as a financial, media and entertainment centre. That transition gave Matt Lipsey a stage to play on. And the creative revolution was spurred by technological change, which according to Richard Lipsey, is also the hope for Canada's future. "London has done [the transition] - and it was all technological," says Prof. Lipsey, who has another son working in the British music business.