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Modeling Directions of Technical Change in Agricultural Sector

  • Orachos Napasintuwong Artachinda


    (Department of Agricultural and Resource Economics,Faculty of Economics,Kasetsart University,Thailand)

This paper reviews the economic models explaining the directions of technical change. The application to agricultural sector is also explored. The induced innovation model extensively used in agricultural development studies has left unexplained stylized facts in several empirical evidences. This leads to the motivation of this paper to find an alternative model. While the induced innovation relies heavily on the change of relative factor price on biased technical change, the directed technical change model developed by Acemoglu (2002, 2007, 2009) endogenizes investment on research and explains the incentives of technology monopolists. The directed technical change model is developed and applied to agricultural sector. Given a hypothetical situation of increasing relative scarce agricultural labor, the model provides insights of which the policy direction for technical change in agricultural sector can be expected.

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Paper provided by Kasetsart University, Department of Agricultural and Resource Economics in its series Working Papers with number 201101.

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Length: 36 pages
Date of creation: Jun 2011
Date of revision:
Publication status: Published in ARE Working Paper No. 2554/1 (June 2011)
Handle: RePEc:kau:wpaper:201101
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  1. Daron Acemoglu, 2002. "Directed Technical Change," Review of Economic Studies, Oxford University Press, vol. 69(4), pages 781-809.
  2. Matthias Weiss, 2005. "On the Evolution of Wage Inequality in Acemoglu’s Model of Directed Technical Change," MEA discussion paper series 05099, Munich Center for the Economics of Aging (MEA) at the Max Planck Institute for Social Law and Social Policy.
  3. Reto Foellmi & Josef Zweimuller, 2006. "Income Distribution and Demand-Induced Innovations," Review of Economic Studies, Oxford University Press, vol. 73(4), pages 941-960.
  4. Isabelle Armanville & Peter Funk, 2003. "Induced innovation: an empirical test," Applied Economics, Taylor & Francis Journals, vol. 35(15), pages 1627-1647.
  5. Olmstead, Alan L & Rhode, Paul, 1993. "Induced Innovation in American Agriculture: A Reconsideration," Journal of Political Economy, University of Chicago Press, vol. 101(1), pages 100-118, February.
  6. Oscar Afonso, 2006. "Skill-biased technological knowledge without scale effects," Applied Economics, Taylor & Francis Journals, vol. 38(1), pages 13-21.
  7. 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.
  8. Guido Cozzi & Giammario Impullitti, 2010. "Government Spending Composition, Technical Change, and Wage Inequality," Journal of the European Economic Association, MIT Press, vol. 8(6), pages 1325-1358, December.
  9. Fernando S. Machado, 1995. "Testing The Induced Innovation Hypothesis Using Cointegration Analysis," Journal of Agricultural Economics, Wiley Blackwell, vol. 46(3), pages 349-360.
  10. Gillingham, Kenneth T. & Newell, Richard G. & Pizer, William A., 2007. "Modeling Endogenous Technological Change for Climate Policy Analysis," Discussion Papers dp-07-14, Resources For the Future.
  11. Luis A. Rivera-Batiz & Paul M. Romer, 1990. "Economic Integration and Endogenous Growth," NBER Working Papers 3528, National Bureau of Economic Research, Inc.
  12. Qinghua Liu & C. Richard Shumway, 2006. "Geographic aggregation and induced innovation in American agriculture," Applied Economics, Taylor & Francis Journals, vol. 38(6), pages 671-682.
  13. Roberto ESPOSTI & Pierpaolo PIERANI, 2002. "Public R&D Investment and Cost Structure in Italian Agriculture 1960-1995," Working Papers 176, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.
  14. Y. Khatri & C. Thirtle & R. Townsend, 1998. "Testing The Induced Innovation Hypothesis: An Application to UK Agriculture, 1953-90," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 6(1), pages 1-28.
  15. Colin G. Thirtle & David E. Schimmelpfennig & Robert E Townsend, 2002. "Induced Innovation in United States Agriculture, 1880–1990: Time Series Tests and an Error Correction Model," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 84(3), pages 598-614.
  16. Afonso, Oscar, 2008. "The impact of government intervention on wage inequality without scale effects," Economic Modelling, Elsevier, vol. 25(2), pages 351-362, March.
  17. Otto, Vincent M. & Löschel, Andreas & Reilly, John, 2008. "Directed technical change and differentiation of climate policy," Energy Economics, Elsevier, vol. 30(6), pages 2855-2878, November.
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