Management Model for Technological Change and Sustainable Growth

Abstract

For sustainable economic growth, over the long term, the products of technological innovation prescribing the change of the economic system as a whole must be disseminated throughout the entire national economy, while at the same time, we must manage the evolution of technological innovation to limit any “locking into” existing forms of technology or knowledge (stagnation of technical innovation) and to trigger all-new technological innovation for the next generation. The problem associated with this kind of resource allocation is one that is relevant on both the micro- and macro-economic levels in terms of R&D in companies and science and technology policies for the national economy. The primary objective of this paper is to argue the controllability of innovation and economic growth over time. I use the framework of social learning dynamics, a kind of replicator dynamics, to develop an economic growth model with technological change. Several results could be suggested by computer simulation as follows: (1) We can perform more desirable economic growth paths with continuous innovation by controlling a discount or depreciation rate of knowledge capital over time. (2) This controlled depreciation rate path may be relative to economic growth rate or marginal productivity over time.