Zvi Griliches on Diffusion, Lags and Productivity Growth …Connecting the Dots

The three most extensively cited papers by Zvi Griliches deal with the diffusion of innovations, distributed lags and the sources of the growth of measured total factor productivity, respectively. The close economic connections between these dynamic phenomena remained largely unexplored and were at best only implicit in his published writings until late in his career. Yet, from his later reflective writings, it is clear that Griliches not only recognized the existence of those connections, but regarded them to be critically important in understanding the determinants of the pace of economic growth. The present paper proceeds in that spirit. It examines the relationship between Gliches’ pioneering study of the diffusion of hybrid corn and the subsequent development of economic theories explaining diffusion phenomenon. Rather than offering a comprehensive survey of the literature, its aim is to expose the connections with lagged investment in capital-embodied innovations, and formalize of the micro-to macro links between technological diffusion dynamics and the pace of measured productivity growth. The heterodox, “evolutionary economics” aspects of this approach to explaining technological ‘transitions’ may be thought to be a significant yet under-appreciated part of Griliches’ intellectual legacy.