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Directed technological change, energy and more: a modern story

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  • Hou, Zheng
  • Roseta-Palma, Catarina
  • Ramalho, Joaquim J.S.

Abstract

Reliance of modern economic activities on the use of energy, most of which still comes from non-renewable sources, provokes concerns regarding the most efficient utilization of energy inputs in production. While most theory expects directed technological change to be biased towards the non-renewable input, there is rare macro-level evidence that technological change is actually biased towards energy rather than other main inputs. To fill this gap, we apply stochastic frontier analysis to country data regarding output produced with capital, labor and energy, and estimate a set of indicators for technological change. Findings show that technological change is biased the most towards energy in general. In particular, although different groups of countries exhibit various patterns, there is strong evidence that technological change favors energy more than labor. This is in line with the theoretical expectation that technological change ought to be biased towards the non-renewable input rather than the renewable ones.

Suggested Citation

  • Hou, Zheng & Roseta-Palma, Catarina & Ramalho, Joaquim J.S., 2020. "Directed technological change, energy and more: a modern story," Environment and Development Economics, Cambridge University Press, vol. 25(6), pages 611-633, December.
    • Handle: RePEc:cup:endeec:v:25:y:2020:i:6:p:611-633_5
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    Cited by:

    1. Zhong, Mei-Rui & Cao, Meng-Yuan & Zou, Han, 2022. "The carbon reduction effect of ICT: A perspective of factor substitution," Technological Forecasting and Social Change, Elsevier, vol. 181(C).
    2. Hou, Zheng & Roseta-Palma, Catarina & Ramalho, Joaquim José dos Santos, 2021. "Does directed technological change favor energy? Firm-level evidence from Portugal," Energy Economics, Elsevier, vol. 98(C).
    3. Nadide YiÄŸiteli, 2023. "Production Losses Due to Technical Inefficiency: A Panel Data Analysis on the Case of BRICS-T Countries," EKOIST Journal of Econometrics and Statistics, Istanbul University, Faculty of Economics, vol. 0(38), pages 53-73, June.

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