On Technology, Uncertainty, and Economic Growth

PhD Thesis# 392
Author:
Dr. Koen (K.G.) Berden
Supervisor(s):
Prof. Dr. C. Van Marrewijk; Prof. Dr. J. Francois
Date:
2006-11-30

Abstract

It is one of the most popular and debated topics in economic science: economic growth. Where do high or low growth rates come from and how do the mechanisms that underlie economic growth work? Who gains and who loses? This doctorate thesis looks at some of these issues. Uncertainty has a negative impact of economic growth, directly through negatively affecting the effectiveness of research and development (R&D), and indirectly through reducing the level of openness of a country because of risk-averse reactions in the developing economy. The process of R&D can continue indefinitely if an economy is able to constantly reduce its costs by having access to a pool of general knowledge that is sufficiently large. Dynamic welfare effects of lowering trade restrictions are much more important and much larger for an economy if it involves changing the share of new innovations and goods that are introduced. The more open a small developing economy is, the larger the dynamic welfare gains are. Obsolescence can be introduced successfully in a horizontal endogenous growth model via incorporating maintenance costs. When the size of the maintenance sector increases at the expense of the production and R&D sectors, growth rates drop.

Publisher of the TI-theses is: Rozenberg Publishing Services