General Purpose Technologies (GPTs) and their Relevance to ICTs; Trade 4/3/2009 & Growth Implications by Iordanis Petsas

Transcription

1 General Purpose Technologes (GPTs and ther Relevance to ICTs; Trade and Growth Implcatons Presented at CITI, Columba Busness School March 2009 By Unversty of Scranton and Baruch College (CUNY Introducton and Motvaton Why ICT sectors are mportant for growth and trade? What ICT polces are welfare mprovng and boost economc growth and trade? March 2009 Page 1

2 Introducton and Motvaton Schumpeteran Growth Incremental vs. Drastc Innovatons General purpose technologes (GPTs are characterzed : the pervasveness n use (generalty of purpose, nnovatonal complementartes Bresnahan and Trajtenberg (1995 The Transstor (1947 The 1 st sector to adopt the transstor was hearng ads. The 2 nd sector to adopt transstors was transstor rados, whch also became the frst transstor-based mass consumer product. The 3 rd sector to adopt the transstor was computers. The 4 th The 5 th sector to sector to adopt the transstor adopt the was the transstor was telecommuncatons automobles. ndustry. Early 1950 s s 1990 s General Purpose Technologes March 2009 Page 2

3 1 st generaton 2 nd generaton computers computers (used vacuum tubes (used transstors Computer Tmelne (5 generatons of modern computers 3 rd generaton computers (used ntegrated crcuts t 4 th generaton computers (used LSI, 5 th generaton computers (use of VLSI, ULSI, Superconductors and and mcroprocessors optc fbers Present General Purpose Technologes Present and Beyond Relatve Prces of Computers and Semconductors, , All prce ndexes are dvded the output prce ndex. 10,000 Log Scale (1996=1 1, Computers Memory Logc General GPTs, Purpose ICTs, Growth Technologes & Trade March 2009 Page 3

4 Lterature Revew on GPTs Helpman and Trajtenberg (1994 Aghon and Howtt (1996 Erkson and Lndh (2000 Chung (2002 The above papers predct that long-run growth does not occur, unless new general purpose technologes contnue to arrve. They also exhbt the scale effects property. In addton, these papers develop models where GPTs generate growth cycles, and the duraton of these cycles depends on the sze of the economy. Number of Scentsts and Engneers (R&D resources have ncreased roughly exponentally over tme March 2009 Page 4

5 Real Per Capta GDP n the Unted States ( (U.S. per capta ncome growth s roughly constant over tme Outlne of the Rest of the Presentaton The Model: An Overvew Steady-State Equlbra Transtonal Dynamcs Implcatons of the Model Future Research March 2009 Page 5

6 The Model: An Overvew A contnuum of dentcal households wth nfntely lved members. Each household s a dynamc famly whose sze grows at the rate of populaton growth. There s a contnuum of ndustres ndexed θ [0,1] producng fnal consumpton goods. Innovaton takes the form of hgher qualty products dscovered through R&D races. dη dt Innovators Early Adopters Dffuson of a New GPT y Early Majorty Late Majorty Laggards dη η dt η = δ(1 η η = 1 η = 0.5 Tme η = 1/(1+ e -(ϕ+δt where dη dt denotes the change on the fracton of ndustres that uses the new GPT through the tme and δ > 0 s the speed of dffuson. The Logstc Curve Tme General Purpose Technologes Slde 12 March 2009 Page 6

7 Prevew of Man Results The model generates endogenous long-run Schumpeteran growth wthout scale effects. The evoluton of per-capta GNP exhbts transtonal growth cycles. The country wth the new GPT wll enjoy comparatve advantage n a greater range of ndustres compared to the country wth the old GPT. Household Behavor Each household h maxmzes ts dscounted d utlty U ( g t = ρ e N 0 log u(tdt The subutlty u(t s defned the followng equaton: 1 log ut ( log[ λq( j, θ, t] dθ 0 j March 2009 Page 7

8 Consumer s Problem The soluton to the consumer ss maxmzaton problem yelds and q( j, θ, t =. c(t c(t c(t p( j, θ, t = r(t ρ Frm Behavor Each frm n each ndustry uses labor to produce ts fnal good Q (θ, t = ς L (θ, α Q t (θγ ς March 2009 Page 8

9 Productvty Gans wth a new GPT γ ζ Parameter measures the sze of productvty gans assocated wth the new GPT γ ς γ = 1 γ 0 = γ p1 θ [0,η] = 1 θ [η,1] Frm Behavor Followng Dornbusch et al. (1977, the relatve labor unt requrement for each good s gven f αq ( θ A ( θ h ( θ α h Q A ( θ < 0 March 2009 Page 9

10 Knowledge Creaton Each ndustry θ n county produces R&D servces under the constant returns to scale producton functon LR ( θ, t R ( θ, t = α R where α s the unt labor requrement n the R&D R producton. R&D Races A challenger k located n country nvests n R&D dscovers the next hgher-qualty product wth nstantaneous probablty Rk ( θ, t I k ( θ, t = X ( t The ndustry-wde probablty of nnovatng s R ( θ, t I ( θ, t = I k ( θ, t = k X ( t The global rate of nnovaton n a typcal ndustry s gven I( θ, t R (, t X(t = θ March 2009 Page 10

11 R&D Races I follow Dnopoulos and Segerstrom (1999 and assume that the level of R&D dffculty s gven X(t = kn(t Steady-State State Equlbrum Real per capta ncome, u(t, s gven log u(t = log c log α + I( θ, tt log λ log λ The long-run Schumpeteran growth s gven du / dt g u = = [ I( θ, t / γ ς ] log λ u( t Q March 2009 Page 11

12 Steady-State Equlbrum Before the Introducton of the New GPT (Fgure 1 ω f N ~ + kα R ( ρ g ~ (1 θ ω = MR( θ = h ~ N + θkα ( ρ g MR (θ R N N ~ θ ω 1 A RD (θ α θ ω= ~ ~ f Q( RD( θ = h ~ α ( θ Q γ ζ 0 η 45 θ ~ 1 θ Steady-State Equlbra (Fgure 2 ω f N ~ + kα R ( ρ g ~ (1 θ ω = MR( θ = h ~ N + θkα ( ρ g MR (θ R N N ~ θ ω ω 1 A B RD (θ RD (θ α θ ω= ~ f ~ Q( RD( θ = h ~ α ( θ Q γ ζ 0 45 θ ~ ~ η θ 1 θ March 2009 Page 12

13 Transtonal Dynamcs (Fgure 3 ~ θ dη η dt η = δ(1 η ~ θ A ~ θ B Saddlepath ~ θ A 0 1 η The Effects of a GPT on the Stock Market g V g N 0 1 Fracton of Industres wth the new GPT March 2009 Page 13

14 Stock-Market Value Relatve to GDP total value of shares CRSP year Implcatons of the Model The present paper develops an analytcal a framework wthout scale effects to determne the effects of GPT dffuson on the equlbrum relatve wages and the pattern of trade between countres. No real and sustaned mprovements n welfare (both n economc growth and trade wll be acheved wthout contnuous mprovement n the ICT and ICT related sectors. Governments need a mult-dscplnary approach embracng technology, laws, nfrastructure, and publc polcy. March 2009 Page 14

15 Future Research Trade nstruments and ther effect on the pattern of trade between countres. Internatonal GPT dffuson GPT dffuson and wage-ncome nequalty Sklled versus unsklled Labor March 2009 Page 15