07+Economics+and+Technology+Policy

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

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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  in the  long run 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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IT and Growth Investments related to Information  Technology have been key to the rise in  productivity in recent decades http://www.youtube.com/watch?v =xz0WIH1zMRk&feature=related
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Government Roles Governments are usually keen to support  new technology in order to achieve economic  growth. In Hong Kong, the Government established the  Innovation and Technology Commission in 1999 http://www.itc.gov.hk/   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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This note was uploaded on 01/10/2012 for the course SOSC 111 taught by Professor Wonganson during the Summer '10 term at HKUST.

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

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