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Abstract

We analyze recent contributions to growth theory based on the model of expanding variety of Romer [Romer, P. (1990). “Endogenous technological change”. Journal of Political Economy 98, 71-102].

In the first part, we present different versions of the benchmark linear model with imperfect competition. These include the “lab-equipment” model, “labor-for-intermediates” and “directed technical change”. We review applica­tions of the expanding variety framework to the analysis of international technology diffusion, trade, cross-country productivity differences, financial development and fluc­tuations. In many such applications, a key role is played by complementarities in the process of innovation.

Keywords

appropriate technology, complementarity, cycles, convergence, directed technical change, endogenous growth, expanding variety, financial development, imperfect competition, integration, innovation, intellectual property rights, imitation, knowledge, learning, patents, technical change, trade, traps

JEL classification: D92, E32, F12, F15, F43, G22, O11, O16, O31, O33, O41, O47

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Source: Aghion Philippe, Durlauf Steven N. (eds.). Handbook of Economic Growth. Volume 1. Part A. North-Holland,2005. — p. 1-1060. 2005
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