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The Origin of Technical Change; Knowledge Generation, Opportunities and Entrepreneurship *

Mark Sanders, Max Planck Institute for Research on Economic Systems Seminar at Max Planck Institute Tuesday, March 21 st , 2005 slide 1 of 15. The Origin of Technical Change; Knowledge Generation, Opportunities and Entrepreneurship * Mark Sanders

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The Origin of Technical Change; Knowledge Generation, Opportunities and Entrepreneurship *

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  1. Mark Sanders, Max Planck Institute for Research on Economic Systems Seminar at Max Planck Institute Tuesday, March 21st , 2005 slide 1 of 15 The Origin of Technical Change; Knowledge Generation, Opportunities and Entrepreneurship* Mark Sanders Max Planck Institute for Research on Economic Systems Entrepreneurship, Economic Growth and Public Policy Kahlaische Strasse 10 D-07745, Jena, Germany sanders@mpiew-jena.mpg.de Workshop The Nature of Opportunity, March 2005

  2. Mark Sanders, Max Planck Institute for Research on Economic Systems Seminar at Max Planck Institute Tuesday, March 21st , 2005 slide 2 of 15 Motivation Growth Theory as it is Opportunity and the Source of Growth The Structure of Scientific (R)evolution Growth Theory as it will be

  3. Mark Sanders, Max Planck Institute for Research on Economic Systems Seminar at Max Planck Institute Tuesday, March 21st , 2005 slide 3 of 15 Growth Theory as it is Rents in Product Markets Effort in R&D New Products Old Ideas

  4. ? Mark Sanders, Max Planck Institute for Research on Economic Systems Seminar at Max Planck Institute Tuesday, March 21st , 2005 slide 4 of 15 Introducing Opportunity Rents in Product Markets Entrepreneurs Knowledge Filter New Products Knowledge ?

  5. Mark Sanders, Max Planck Institute for Research on Economic Systems Seminar at Max Planck Institute Tuesday, March 21st , 2005 slide 5 of 15 The Source of Growth Pieces of Knowledge + E. Vision and Talent= Commercial Opportunity

  6. Mark Sanders, Max Planck Institute for Research on Economic Systems Seminar at Max Planck Institute Tuesday, March 21st , 2005 slide 6 of 15 Scientific (R)evolution Science generates the Pieces of Knowledge What drives Scientists to do so? Paradigms Normal Science vs. Scientific Crisis

  7. Mark Sanders, Max Planck Institute for Research on Economic Systems Seminar at Max Planck Institute Tuesday, March 21st , 2005 slide 7 of 15 Scientific (R)evolution A Model of Scientific Activity where function f(.) is the knowledge filter and nP-n is the universe of opportunities. New products is then proportional to the number of unexploited opportunities and depends on the level of entrepreneurial R&D. This activity is profit driven.

  8. Mark Sanders, Max Planck Institute for Research on Economic Systems Seminar at Max Planck Institute Tuesday, March 21st , 2005 slide 8 of 15 Scientific (R)evolution A Model of Scientific Activity where function g(.) captures the role of entrepreneurial vision and talent. Opportunities are recognized and combine a number of scientific ideas. It is therefore positive in the stock of scientific ideas.

  9. Mark Sanders, Max Planck Institute for Research on Economic Systems Seminar at Max Planck Institute Tuesday, March 21st , 2005 slide 9 of 15 Scientific (R)evolution Normal Scientific Activity f(0)=0, f’(.)>0, f”(.)<0, 0<α<1and β>1

  10. Mark Sanders, Max Planck Institute for Research on Economic Systems Seminar at Max Planck Institute Tuesday, March 21st , 2005 slide 10 of 15 Scientific (R)evolution Crisis Scientific Activity Alternative Paradigms

  11. Mark Sanders, Max Planck Institute for Research on Economic Systems Seminar at Max Planck Institute Tuesday, March 21st , 2005 slide 11 of 15 Scientific (R)evolution Paradigm Switching θ(t)=ψ(At/Kt)*φ(At)*Pr(KA0>Kt)

  12. Mark Sanders, Max Planck Institute for Research on Economic Systems Seminar at Max Planck Institute Tuesday, March 21st , 2005 slide 12 of 15 Scientific (R)evolution Problems I II III KIII0 Kt KII0 At KI0 Time

  13. Mark Sanders, Max Planck Institute for Research on Economic Systems Seminar at Max Planck Institute Tuesday, March 21st , 2005 slide 13 of 15 Growth Theory as it will be

  14. Mark Sanders, Max Planck Institute for Research on Economic Systems Seminar at Max Planck Institute Tuesday, March 21st , 2005 slide 14 of 15 Growth Theory as it will be

  15. Mark Sanders, Max Planck Institute for Research on Economic Systems Seminar at Max Planck Institute Tuesday, March 21st , 2005 slide 15 of 15 Growth Theory as it will be In Short: A Steady State Sucks, Cyclical Growth Theory Rocks!! Ties institutions to Endogenous Growth Explains long cycles (Kondratieff) Clearly identifies role of Entrepreneurs Explains why Europe and why in 18th Century Explains transition from stagnation to growth Explains cyclical skill-biases Explains cyclical productivity slowdowns Suggests very different policies

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