Obsolescence and modernization in the growth process

Raouf Boucekkine (raouf.boucekkine@univ-amu.fr), Fernando del Río and Omar Licandro (licandro.omar@gmail.com)

No 2002067, LIDAM Discussion Papers CORE from Université catholique de Louvain, Center for Operations Research and Econometrics (CORE)

Abstract: In this paper, an endogenous growth model is built up incorporating Schumpeterian growth and embodied technological progress. Under embodiment, long run growth is affected by the following effects: (i) obsolescence costs add to the user cost of capital, reducing the research effort; and (ii) the modernization of capital through investment raises the incentives to undertake R&D activities. Applied to the understanding of the growth enhancing role of both capital and R&D subsidies, we conclude that the positive effect of modernization generally more than compensate the negative effect of obsolescence.

Keywords: Shumpeterian growth; creative destruction; embodiment; obsolescence; modernization (search for similar items in EconPapers)
JEL-codes: E22 E32 O40 (search for similar items in EconPapers)
Date: 2002-12
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Citations: View citations in EconPapers (9)

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Related works:
Journal Article: Obsolescence and modernization in the growth process (2005)
Working Paper: Obsolescence and modernization in the growth process (2005)
Working Paper: Obsolescence and Modernization in the Growth Process (2002)
Working Paper: Obsolescence and Modernization in the Growth Process (2001)
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