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Induced innovation: an empirical test

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  • Isabelle Armanville
  • Peter Funk

Abstract

A method is developed to empirically test the hypothesis of induced innovation as it has been specified and used in the theoretical literature. A strong and a weak version of the hypothesis is tested using sectorial data from the USA, Canada, Germany, France and the UK. The strong version tests for the exact dependency of the relation between the change in factor-productivities on the one hand and relative prices and actual factor-productivities on the other hand. The weak version only tests for the direction of this dependency. In all countries the weak hypothesis is accepted in all sectors except in 'electricity, gas, and water'. The strong hypothesis is accepted in about half of all sectors. It is rejected only in sectors, in which the degree to which progress is intentional is low.

Suggested Citation

  • Isabelle Armanville & Peter Funk, 2003. "Induced innovation: an empirical test," Applied Economics, Taylor & Francis Journals, vol. 35(15), pages 1627-1647.
  • Handle: RePEc:taf:applec:v:35:y:2003:i:15:p:1627-1647 DOI: 10.1080/0003684032000125051
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    References listed on IDEAS

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    1. Binswanger, Hans P, 1974. "The Measurement of Technical Change Biases with Many Factors of Production," American Economic Review, American Economic Association, pages 964-976.
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    6. Romer, Paul M, 1990. "Endogenous Technological Change," Journal of Political Economy, University of Chicago Press, pages 71-102.
    7. Richard G. Newell & Adam B. Jaffe & Robert N. Stavins, 1999. "The Induced Innovation Hypothesis and Energy-Saving Technological Change," The Quarterly Journal of Economics, Oxford University Press, vol. 114(3), pages 941-975.
    8. Daron Acemoglu, 2002. "Directed Technical Change," Review of Economic Studies, Oxford University Press, pages 781-809.
    9. Stevenson, Rodney, 1980. "Measuring Technological Bias," American Economic Review, American Economic Association, pages 162-173.
    10. Funk, Peter, 2002. "Induced Innovation Revisited," Economica, London School of Economics and Political Science, vol. 69(273), pages 155-171, February.
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    Cited by:

    1. Yucan Liu & C. Richard Shumway, 2009. "Induced Innovation in U.S. Agriculture: Time-series, Direct Econometric, and Nonparametric Tests," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 91(1), pages 224-236.
    2. Orachos Napasintuwong Artachinda, 2011. "Modeling Directions of Technical Change in Agricultural Sector," Working Papers 201101, Kasetsart University, Department of Agricultural and Resource Economics.
    3. Funk, Peter & Vogel, Thorsten, 2004. "Endogenous skill bias," Journal of Economic Dynamics and Control, Elsevier, vol. 28(11), pages 2155-2193, October.
    4. Shumway, C. Richard & Liu, Yucan, 2006. "Induced Innovation in the Agricultural Sector: Evidence From a State Panel," 2006 Annual meeting, July 23-26, Long Beach, CA 21089, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).

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