(BQ) Part 2 book "Macroeconomics" has contents: Technological progress and growth; technological progress - the short, the medium, and the long run; the goods market in an open economy; output, the interest rate, and the exchange rate; exchange rate regimes,.and other contents. | Find more at 12 Technological Progress and Growth T he conclusion in Chapter 11 that capital accumulation cannot by itself sustain growth has a straight-forward implication: Sustained growth requires technological progress. This chapter looks at the role of technological progress in growth. Section 12-1 looks at the respective role of technological progress and capital accumulation in growth. It shows how, in steady state, the rate of growth of output per person is simply equal to the rate of technological progress. This does not mean, however, that the saving rate is irrelevant. The saving rate affects the level of output per person but not its steady state rate of growth. Section 12-2 turns to the determinants of technological progress, the role of research and development (R&D), and the role of innovation versus imitation. Section 12-3 discusses why some countries are able to achieve steady technological progress while others do not. In so doing, it looks at the role of institutions in sustaining growth. Section 12-4 returns to the facts of growth presented in Chapter 10 and interprets them in the light of what we have learned in this and the previous chapter. 241 Find more at 12-1 Technological Progress and the Rate of Growth In an economy in which there is both capital accumulation and technological progress, at what rate will output grow? To answer this question, we need to extend the model developed in Chapter 11 to allow for technological progress. To introduce technological progress into the picture, we must first revisit the aggregate production function. Technological Progress and the Production Function Technological progress has many dimensions: ■■ ■■ It can lead to larger quantities of output for given quantities of capital and labor. Think of a new type of lubricant that allows a machine to run at a higher speed and to increase production. It can lead to better products. Think of the steady .
