Article ID: | iaor1992183 |
Country: | Austria |
Volume: | 1987 (Mar), 39 pp., 7.00, RR-87-3 |
Start Page Number: | 23 |
End Page Number: | 35 |
Publication Date: | Apr 1991 |
Journal: | IIASA Reports |
Authors: | Ayres R.U. |
Keywords: | marketing, planning, manufacturing industries |
This report attempts to answer a rather deep question: To what extent can ‘pure’ economics explain economic growth and technological change? By ‘pure’ economics, it is meant the relationships governing the behavior of abstract entities, producing abstract products or services for sale in an idealized competitive market. Pure economics, in the above sense, admits R&D and innovations of an unspecified kind; it also admits improvements (unspecified) and learning curves or experience curves. The report concludes, however, that the dynamic behavior of the product ‘life cycle’ in specific cases, and the observed clustering of innovations in particular fields at particular times, with periods of rapid progress followed by slow-downs, can only be explained by also taking into account the preexisting state of technology, and the laws of nature. It is argued that technological progress is marked not only by processes of relatively predictable incremental improvement (e.g., ‘learning curves’), but also by a series of discrete ‘barriers’ and ‘breakthroughs’. These are not random events, although their exact timing is undoubtedly very difficult to predict. The technological life cycle can be defined as the period from a major breakthrough opening up a new territory for exploitation to the next major barrier. It is characterized, in part, by a high initial marginal productivity of R&D, and a more or less continuous decline thereafter, as the territory is gradually exhausted. This model is qualitatively consistent with the well-known ‘S-shaped curve’ phenomenon, describing measures of technological performance over time, as well as a number of other observed phenomena.