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Technological change and economic development: endogenous and exogenous fluctuations

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  • Marianna Epicoco

Abstract

This paper aims at exploring the endogenous and exogenous forces that determine long-run fluctuations of innovative and economic activity. It proposes that technological paradigm shifts, structural change and major fluctuations of production are the result of the same endogenous process. This is defined as a co-evolutionary process between technological and economic variables based on cumulative multiplier and accelerator feedback effects between investments in innovation and demand. Exogenous factors are supposed to act upon this endogenous process, influencing the length and amplitude of fluctuations. This framework contributes to extant literature as it envisages an explicit endogenous mechanism explaining cyclical fluctuations of innovative and economic activity, and, at the same time, incorporates exogenous factors. Moreover, by combining the Schumpeterian analyses of innovation dynamics with the multiplier and accelerator effects coming from Keynesian theories, the framework integrates the impact of technological variables on economic activity and vice versa. To provide a preliminary supporting evidence, we have fitted the ICT cycle and the economic cycle to patent and productivity data, respectively. Our results suggest that the growth potential of ICT could be declining. This situation may represent an important opportunity, for public policy and socioinstitutional actors, to orient future development toward socially desirable directions.

Suggested Citation

  • Marianna Epicoco, 2018. "Technological change and economic development: endogenous and exogenous fluctuations," Working Papers of BETA 2018-34, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
    • Handle: RePEc:ulp:sbbeta:2018-34
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    File URL: http://beta.u-strasbg.fr/WP/2018/2018-34.pdf
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    Cited by:

    1. Marianna Epicoco & Magali Jaoul-Grammare & Anne Plunket, 2020. "Technological novelty and productivity growth: a cliometric approach," Working Papers 04-20, Association Française de Cliométrie (AFC).
    2. Iraj Daizadeh, 2021. "Leveraging latent persistency in United States patent and trademark applications to gain insight into the evolution of an innovation-driven economy," Papers 2101.02588, arXiv.org, revised May 2021.

    More about this item

    Keywords

    technological paradigm shift; structural change; economic fluctuations; co-evolution; productivity slowdown; ICT.;
    All these keywords.

    JEL classification:

    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

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