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Organizing Growth

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  • Luis Garicano
  • Esteban Rossi-Hansberg

Abstract

We study the impact of information and communication technology on growth through its impact on organization and innovation. Agents accumulate knowledge through two activities: innovation (discovering new technologies) and exploitation (learning how to use the current technology). Exploitation requires the development of organizations to coordinate the work of experts, which takes time. The costs and benefits of such organizations depend on the cost of communicating and acquiring information. We find that while advances in information technology that lower information acquisition costs always increase growth, improvements in communication technology may lead to lower growth and even to stagnation, as the payoff to exploiting innovations through organizations increases relative to the payoff of new radical innovations.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 13705.

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Date of creation: Dec 2007
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Publication status: published as Garicano, Luis & Rossi-Hansberg, Esteban, 2012. "Organizing growth," Journal of Economic Theory, Elsevier, vol. 147(2), pages 623-656.
Handle: RePEc:nbr:nberwo:13705

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Citations

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Cited by:
  1. Nick Bloom & Raffaella Sadun & John Van Reenen, 2009. "The organization of firms across countries," LSE Research Online Documents on Economics, London School of Economics and Political Science, LSE Library 25481, London School of Economics and Political Science, LSE Library.
  2. Giuseppe Berlingieri, 2013. "Outsourcing and the Rise in Services," CEP Discussion Papers, Centre for Economic Performance, LSE dp1199, Centre for Economic Performance, LSE.
  3. Lorenzo Caliendo & Esteban Rossi-Hansberg, 2011. "The Impact of Trade on Organization and Productivity," NBER Working Papers 17308, National Bureau of Economic Research, Inc.
  4. Andrew F. Newman & Patrick Legros, 2011. "Incomplete Contracts and Industrial Organization: A Survey," Boston University - Department of Economics - Working Papers Series, Boston University - Department of Economics WP2011-036, Boston University - Department of Economics.
  5. Umberto Garfagnini & Bruno Strulovici, 2012. "Social Learning and Innovation Cycles (revision of DP#1516, The Dynamics of Innovation)," Discussion Papers, Northwestern University, Center for Mathematical Studies in Economics and Management Science 1546, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  6. Acemoglu, Daron, 2012. "Introduction to economic growth," Journal of Economic Theory, Elsevier, Elsevier, vol. 147(2), pages 545-550.
  7. Kredler, Matthias, 2014. "Experience vs. obsolescence: A vintage-human-capital model," Journal of Economic Theory, Elsevier, Elsevier, vol. 150(C), pages 709-739.
  8. Amira Bouziri & Marc-arthur Diaye, 2014. "A Test of Garicano's Knowledge Model," Economics Bulletin, AccessEcon, vol. 34(3), pages 1448-1455.

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