07+Economics+and+Technology+Policy

07+Economics+and+Technology+Policy - SOSC111 Science,...

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SOSC111 Lecture 7 Economics and Technology Policy
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Governments need to promote innovation Because innovation is very important for economic growth Governments would want to know how much technological development and innovation contributes Governments also wish to know how much they should invest and where they should put their money…
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Four General Factors of Economic Growth Capital or Investment: this typically increases the productivity of labor. Commercial Expansion: expanding markets increases economic productivity through specialization (division of labor) Scale or Size effects: typically population growth increases the market Increases in the stock of human knowledge : this includes technology, but it also includes organization. Technology and organization are closely linked in economic development.
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How important is technology to economic growth? Economists have studied for many years the inputs to economic development, and they have found that capital (or the growth of investment) does not sufficiently explain why some economies are so dynamic. Studies of advanced economies show that 50- 70% of growth in economic output comes from technological change
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Economic Theory of Growth An increase in capital per hour of labor brings a movement along the productivity curve PC 0 .
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Model with Technological Growth An increase in human capital and technological advance shifts the productivity curve upward from PC 0 to PC 1 .
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Government Roles Governments are usually keen to support new technology in order to achieve economic growth. Governments influence the creation of technology through two ways: Passive measures of indirect encouragement Active measures with direct encouragement and intervention
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Passive (Indirect) Measures Laws and Regulations: These attempt to create the necessary environment in which technology will grow Intellectual Property Rights (patents, copyrights) Standards (e.g. common norms for voltage, plugs) Market reforms (e.g. to make bank loans and stock markets available) Trade Policies (e.g. encouraging local technological capabilities by restricting imports) This type of promotion is indirect , since it will benefit anyone who develops technology
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Intellectual Property Rights Since new knowledge is often the key competitive asset for an innovation, the state will offer temporary property rights to such knowledge (intellectual property) Patents : Ownership for specific knowledge (which is published and can be used by others – licensed - for a fee) Copyright : Ownership to text, music, picture/film/video, or software (can be copied and used for a fee) Intellectual property protection gives incentives to people who wish to develop new knowledge or products The only conditions are that it is unique and will be shared
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Standards Governments promote common standards to ensure interchangeability Industrial standards:
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This note was uploaded on 07/30/2011 for the course SOS 111 taught by Professor Bark during the Summer '08 term at HKU.

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07+Economics+and+Technology+Policy - SOSC111 Science,...

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