various uncertainties that are related to the project.the period during which the firm will have a competitive edge, and.the number of customers who can purchase the product based on technology.the competitive advantage that an invention can yield.They pay attention to the following issues: The managers of companies consider several criteria when deciding whether it is necessary to invest in the development of new technology. In other words, it is difficult for an inventor to prevent other people from recreating the technology and using it for commercial purposes. One of his main arguments is that the ideas which underlie new technologies are non-excludable. Furthermore, one should take into account that R8D efforts require significant investments that cannot be afforded by separate individuals.Īdditionally, David Weil discusses the transfer of technologies. However, in later years, the creation of technologies began to be driven by governmental organizations or large corporations. He argues that before the second half of the nineteenth century, industrial development was shaped by the efforts of individual inventors who often did not have formal scientific training. According to the author, technology enables an organization to overcome the barriers posed by diminishing returns.Īpart from that, David Weil focuses on the creation of technology. In particular, he refers to the Cobb-Douglas production function, which involves such variables as productivity, physical capital, and human capital. Learn More Chapter 8: The Role of Technology in GrowthĪt the beginning of this chapter, David Weil discusses the role of technologies in increasing economic growth and productivity.
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