Machines as Engines of Growth

Joseph Zeira

DEGIT Conference Papers from DEGIT, Dynamics, Economic Growth, and International Trade

Abstract: This paper builds a model of growth through industrialization, where machines replace workers in a growing number of tasks. This enables the economy to experience long-run growth, as machines become servants of humans, and as their number grows unboundedly. The mechanism that drives growth is feedback between industrialization and wages. High wages provide incentives to use machines, while industrialization raises wages. The model shows that industrialization and growth take off only if the economy is productive enough. It also shows that monopoly power can stifle growth, as it lowers wages. Hence, a one-time increase in productivity, or a reduction of monopoly power can push economies from stagnation to industrialization.

Keywords: Economic Growth; Industrialization; Technology (search for similar items in EconPapers)
JEL-codes: O14 O30 O40 (search for similar items in EconPapers)
Pages: 36 pages
Date: 2006-06
New Economics Papers: this item is included in nep-dev
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (27)

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Related works:
Working Paper: Machines as Engines of Growth (2005)
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Persistent link: https://EconPapers.repec.org/RePEc:deg:conpap:c011_059

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