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The Cyclical Advancement of Drastic Technologies

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  • I. Hakan Yetkiner
  • Albert de Vaal
  • Adriaan van Zon

Abstract

Drastic technological changes are cyclical because basic R&D is carried on only at times when entrepreneurial profits for incremental technologies of the prevailing technological paradigm fall close to zero. The model is essentially an endogenous technological change framework. Varieties, input to the final good production, are composite goods. Each composite good is produced by a set of intermediaries, outgrowths of basic R&D and applied R&D. The basic intermediate, product of basic R&D, is modeled as in Romer (1990). Complementary intermediates, the outgrowths of applied R&D, do show the property of falling profits. The falling character of profits implies that basic R&D becomes more yielding than applied R&D at certain points in time. Research people switch back and forth between the applied and basic research sectors, creating (endogenous) cycles in the advancement of drastic technologies and economic activity.

Suggested Citation

  • I. Hakan Yetkiner & Albert de Vaal & Adriaan van Zon, 2003. "The Cyclical Advancement of Drastic Technologies," Working Papers FNU-21, Research unit Sustainability and Global Change, Hamburg University, revised Apr 2003.
    • Handle: RePEc:sgc:wpaper:21
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    References listed on IDEAS

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    More about this item

    Keywords

    GPT; growth cycles; basic R&D; applied R&D; economic growth;
    All these keywords.

    JEL classification:

    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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