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Innovation Process and Policy: What Do We Learn from New Growth Theory?

Innovation Process and Policy: What Do We Learn from New Growth Theory?

Chapter:
(p.515) Innovation Process and Policy: What Do We Learn from New Growth Theory?
Source:
The Rate and Direction of Inventive Activity Revisited
Author(s):
Philippe Aghion
Publisher:
University of Chicago Press
DOI:10.7208/chicago/9780226473062.003.0016

This chapter discusses the implications of advances in endogenous growth for both macro- and microeconomics. A major contribution of theories of economic growth that explicitly endogenize the production and diffusion of technology is to identify the potential policy impacts of different types of intervention. The chapter focuses on the contemporary policy matters insofar as they facilitate a higher level of innovative investment and shift the long-run growth rate. A range of recent evidence highlights the role of ensuring the ability to protect ideas (e.g., a stronger patent system) in economic growth, and the potential benefits of “industrial policy” measures.

Keywords:   innovation, macroeconomics, microeconomics, intervention, new growth theory, industrial policy, economic growth

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