Economic development and the structure of cross-technology interactions

TL;DR

This paper investigates how different structures of cross-technology spillovers influence economic growth, revealing that certain interaction patterns can enable exponential growth and complex technological transitions.

Contribution

It provides a theoretical analysis of how various cross-technology interaction structures affect growth dynamics and long-term technological contributions.

Findings

One-way interactions cannot induce exponential growth.

Certain spillover structures enable sustained exponential growth.

Complex growth patterns like technology transitions can emerge from specific interaction structures.

Abstract

Most explanations of economic growth are based on knowledge spillovers, where the development of some technologies facilitates the enhancement of others. Empirical studies show that these spillovers can have a heterogeneous and rather complex structure. But, so far, little attention has been paid to the consequences of different structures of such cross-technology interactions: Is economic development more easily fostered by homogenous or heterogeneous interactions, by uni- or bidirectional spillovers? Using a detailed description of an r&d sector with cross-technology interactions embedded in a simple growth model, we analyse how the structure of spillovers influences growth prospects and growth patterns. We show that some type of interactions (e.g., one-way interactions) cannot induce exponential growth, whereas other structures can. Furthermore, depending on the structure of interactions, all or only some technologies will contribute to growth in the long run. Finally, some spillover structures can lead to complex growth patterns, such as technology transitions, where, over time, different technology clusters are the main engine of growth.