The Role of Technological Change
We develop an optimal growth model that includes several important new features. First, technological change is endogenously related to the growth of 'knowledge.' Investment may be directed either towards physical capital or knowledge (or both). Knowledge becomes an effective substitute for scarce resources by increasing the technical efficiency of resource utilization both for consumption and in capital. Nevertheless, a finite quantity resource must be embodied in capital and a finite flow is required for depreciation. Thus, there is an upper limit to technical efficiency and economic growth is thus ultimately limited by the availability of renewable resources. For a simple aggregate production function it is shown that technical efficiency never approaches unity on an optimal path.
Computer Sciences | Technology and Innovation
Information Systems and Management
Journal of Environmental Economics and Management
AYRES, R. U. and Miller, Steven.
The Role of Technological Change. (1980). Journal of Environmental Economics and Management. 7, (4), 353-371. Research Collection School Of Information Systems.
Available at: http://ink.library.smu.edu.sg/sis_research/26