Endogenous innovation and economic growth

Thesis

This thesis seeks to explain variations in growth rates across countries and time within an endogenous growth framework. Intentional investments by profit-seeking agents determine the rate of technological progress, which in turn determines an economy's rate of growth.

Chapter 2 surveys the existing literature and introduces the quality ladder model of endogenous growth, upon which much of this thesis builds. Chapter 3 argues that entrepreneurs' incentives to invest in Research and Development (R & D) depend upon workers' complementary investments in human capital. Strategic complementarities between the two investments, together with indivisibilities in the R & D technology, may result in an economy becoming trapped in a "low skills" equilibrium.

Chapter 4 argues that the realisation of the full productive potential of an innovation may be dependent upon a lengthy process of further improvement. The existing literature is surveyed and a distinction between fundamental and secondary innovation drawn. Chapter 5 argues that this distinction provides a rationale for a "penalty" to being a pioneer, and an alternative explanation for income convergence to those suggested in the existing literature. Depending on the magnitude of secondary knowledge spillovers in production and research, a pioneer may be characterised by a higher or lower level of research employment and rate of economic growth than an otherwise identical latestarter. Technological lock-in may occur.

Chapter 6 investigates the relationship between technological change and international trade. We argue that an economy may face a trade-off between specialising according to its current pattern of comparative advantage and specialising in sectors where the potential for rapid productivity growth may generate such an advantage in the future. A distinction between static and dynamic comparative advantage is drawn. Chapter 7 relates the evolution of the crosssection distribution of income over time to patterns of international trade, and considers the relevance of the concept of "international competitiveness" for an economy's standard of living.

Authors: Redding, S

• Peer review status: Peer reviewed
• Type of award: DPhil
• Level of award: Doctoral
• Awarding institution: University of Oxford