Unformatted text preview: he 1970s and the 2000s is energy .
William Nordhaus of Yale Univ ers ity has found that the produc tiv ity s lowdown whic h s tarted
in the 1970s radiated outwards from the mos t energy intens iv e s ec tors , a produc t of the
dec ade’s oil s hoc k s . Dear energy may help ex plain the produc tiv ity s lowdown of the 2000s
as well. But this is a trend that one c an hope to s ee rev ers ed. In Americ a, at leas t, new
tec hnologies are eating into thos e high pric es . Mr Thiel is right to res erv e s ome of his
hars hes t c ritic is m for the energy s ec tor’s lac k lus tre rec ord on innov ation; but giv en the right
mark et c onditions it is not entirely hopeles s .
Perhaps the mos t radic al ans wer to the problem of the 1970s s lowdown is that it was due to
globalis ation. In a s omewhat whims ic al 1987 paper, Paul Romer, then at the Univ ers ity of
Roc hes ter, s k etc hed the pos s ibility that, with more work ers av ailable in dev eloping
c ountries , c utting labour c os ts in ric h ones bec ame les s important. Inv es tment in
produc tiv ity was thus s idelined. The idea was heretic al among mac roec onomis ts , as it
dis pens ed with muc h of the c areful theoretic al mac hinery then being us ed to analy s e
growth. But as Mr Romer noted, ec onomic his torians c omparing 19thc entury Britain with
Americ a c ommonly c redit relativ e labour s c arc ity in Americ a with driv ing forward the c apital
intens e and highly produc tiv e “Americ an s y s tem” of manufac turing.
The view from Serendip
www.e c onomist.c om/ne ws/br ie f ing/21569381- ide a - innova tion- a nd- ne w- te c hnology- ha ve - stoppe d- dr iving- gr owth- ge tting- inc r e a sing 6/8 1/31/13 I nnova tion pe ssimism: Ha s the ide a s ma c hine br oke n down? | The Ec onomist Some ec onomis ts are c ons idering how Mr Romer’s heres y might apply today . Daron
Ac emoglu, Gino Ganc ia, and Fabriz io Zilibotti of MIT, CREi (an ec onomic s res earc h c entre
in Barc elona) and the Univ ers ity of Zuric h, hav e built a model to s tudy this . It s...
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This document was uploaded on 02/16/2014 for the course MGMT 237 at UPenn.
- Spring '14