Modern Economic Growth Essay -- Economics, Technological Progress

Theoretical model of modern economic growth shows that long-term economic growth and raise the level of per capita income depends on technological progress. This is because of without technological progress and with the increase of capital per capita, marginal returns of capital would diminish and output per capita growth would eventually stagnate (Solow, 1956; Swan, 1956). Studies have shown that â€Å"experience, skills and knowledge in the long-term economic growth is playing an increasingly important role† (World Bank, 1999). Despite how technological progress work on economic growth, and how there are different views on the role of in the end, but I am afraid no one would deny that technical progress in the important role of economic development. In this sense, for a country to achieve long-term economic growth, we must continue to promote technological progress. However, economic growth theory is analyzed in general, and usually under the assumption that in the closed ec onomy, and technological progress in a country not normally have taken place in various departments at the same time, and now the economy are often increasingly open economy. In this way, the technological progress in different economic impact on a country may be quite different. In addition, we assume that technological progress is Hicks neutral, is to an industry in itself, but technological progress also reflects the establishment of new industries and development. The new industries and technology-intensive industries generally older than the high, the use of less labor. Even the old industries, the general trend of technological progress is labor-saving. However, despite the long-term economic growth, technological progress is very important, and even if we... ... technological progress (the actual cost of the actual producer prices drop or increase) caused. (Note: Of course, if technological progress is the price of the product after the fall, FG Theorem is not established, so it does not necessarily affect the distribution of income, such as SS as shown in Theorem. However, a small country in the open cases, product prices given by the international market, so the assumption that commodity prices remain unchanged or valid, FG theorems generally be valid.) Obviously, if technical progress can not be changed after the factor prices, the production of the two departments, the capital / labor ratio would not change, then the imbalance in supply and demand factors will occur. If this imbalance can not be adjusted by the factor market, some elements will be in short supply, while the other elements will be unemployed or idle.