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Scale of Operations

In: Accelerating Economic Growth

Author

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  • Jakub Growiec

    (SGH Warsaw School of Economics)

Abstract

An important factor that contributed to the long-run success of the human species in furthering its local control, conquering the world and building a global economy, is increasing returns to scale (IRS) in production and research and development. IRS means that proportional increases in inputs yield more than proportional increases in output. This chapter explains Paul Romer’s observation that technological ideas are a source of IRS because they are non-rivalrous. Then it proceeds to illustrate how the scale of operations increased after every technological revolution in software: the cognitive, scientific and digital revolution, leading to the gradual development of the global research network and the global economy. It is technological progress, not institutions, which underlies lasting economic growth. The causality from institutions to technology and economic growth is observed only when the institutions are blatantly bad. Finally, the chapter also provides a case for development of better global institutions for pursuing digital policy, needed in the current digital era.

Suggested Citation

  • Jakub Growiec, 2022. "Scale of Operations," Frontiers in Economic History, in: Accelerating Economic Growth, chapter 0, pages 77-93, Springer.
    • Handle: RePEc:spr:frochp:978-3-031-07195-9_6
    DOI: 10.1007/978-3-031-07195-9_6
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