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Technological Change and the Creative Response: Inclusive Measures of Growth

Author

Listed:
  • Cristiano Antonelli

    (Università degli Studi di Torino and BRICK)

  • Christophe Feder

    (Università della Valle d’Aosta and BRICK)

Abstract

This chapter develops the Schumpeterian framework of the “creative response” and introduces an inclusive growth accounting methodology that captures the full range of effects of technological change on output. Extending the Solow approach to a Constant Elasticity of Substitution (CES) production function, the method distinguishes the conventional neutral (shift) effect from two non-neutral channels: (i) slope effects that modify input output elasticities (biased or directed technological change) and (ii) curvature effects that alter the elasticity of substitution between capital and labor. We derive closed-form measures that link evolving elasticities to factor reallocation and output, and we construct counterfactuals that isolate neutral, non-neutral, and overall technological contributions to GDP. Applied to the G7 over 1994–2019, the results show that standard growth accounting systematically understates the role of technological change: the neutral component has weakened in recent decades while non-neutral elements have provided stronger and more heterogeneous contributions to growth across countries. The findings highlight factor reallocation and evolving technological congruence as central mechanisms through which modern innovation affects aggregate outcomes.

Suggested Citation

  • Cristiano Antonelli & Christophe Feder, 2026. "Technological Change and the Creative Response: Inclusive Measures of Growth," Economic Complexity and Evolution,, Springer.
    • Handle: RePEc:spr:eccchp:978-3-032-26294-3_15
    DOI: 10.1007/978-3-032-26294-3_15
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