Incorporation of technical progress in the model of economic growth
Technical progress is the discovery of new ways of using production resources to improve the quality and quantity of goods and services, i.e. final products. Technical progress has two main directions.
1. Creating fundamentally new useful products - products with new consumer properties.
2. Development and improvement of technological processes.
2.1. The invention and implementation of new technology.
2.2. Application of more advanced methods of production.
2.3. Application of new forms of production organization.
Technical progress allows you to get more products with less costs of factors of production and, first of all, with less costs:
1) living labor - it is replaced by a machine one. An inevitable consequence of this is the increase in the capital intensity of production (the technical, cost, organic structure of capital is increasing). A difficult problem for the national economy is to achieve a certain combination of the increase in labor productivity and the increase in capital-labor ratio;
2) energy and traditional mineral resources the result of technical progress is the increase in resource efficiency
3) capital - the increase in capital productivity - the replacement of tools is more perfect.
Reducing the cost of energy and mineral resources, as well as capital allows production to be carried out by saving capital.
Thus, technological progress has two main forms: allocate capital-intensive and capital-saving types of technological progress.
A different approach to the classification of technological progress is associated with the concept of neutrality. Technical progress is neutral if it does not change the ratio of the values of certain parameters. The concepts of neutrality have something in common that the distribution of income as a ratio of profit to wages rK /wL = π (1 - π), where r - the rate of return on invested capital; K - the amount of capital; w - hourly wage rate; L - the size of the labor factor; π - the share of profit in income, with the passage of time remains constant. They differ in terms of the conditions under which this should occur. Depending on the ratio of which parameters does not change, there are three types of neutral technical progress: Harrod-neutral, Hicks-neutral and Solow-neutral.
Hicks Neutral technical progress is both labor-saving and capital-saving, thus the production function of Cobb-Douglas is Y = AF ( K, L ), where A - a technological parameter that shows the growth rates of returns from factors of production, measured in effective units.
Effective labor units show how many real units of labor and capital, with a certain impact, would have to be spent on production in the absence of technological progress.
The productivity of labor and capital is growing at an equal pace.
Harrod-neutral technical progress characterizes a situation in which the average and marginal productivity of capital remain unchanged. Despite the increase in the capital-labor ratio ( K/L ), the marginal productivity of capital does not decrease, which would be in the absence of technological progress, as it increases the amount of labor in the same the proportion in which capital is growing. Thus, it is labor-intensive, and the production function has the form Y = F ( K, AL ).
Solow-neutral is understood as capital-increasing technological progress, and the production function has the form Y = F ( AK, L ). At the same time, consistent with the neoclassical approach, the growth of the economy is consistent with Harrod-neutral technical progress, since in this case the capital intensity of the product remains unchanged.
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