Posts Tagged ‘ideas’

Ideas and Researchers as cause of underdevelopment

September 14, 2013 Leave a comment

Reading CI Jones on role of ideas as generating perpetual growth. Handbook of Economic Growth ch16. Ideas are non-rivalrous and therefore have increasing returns to scale. The productivity of ideas per capita does not depend on the number of ideas produced per researcher: “per capita output depends on the total stock of ideas, not on ideas per person.” (1073). More population more ideas more productivity per capita, regardless of population growth, In fact more population growth becomes better. Economists who focus on ideas want the earth to be flooded with people to get most idea output.

Defining ideas as ways of rearranging material inputs to give more output more efficiently. Since every idea increases the output of all the workers, or all the inputs in an economy one may look at the policy of immigration as a form of under-development assuming researches or high capital individuals produce ideas. This model explains why importation of researches from populous countries is the best policy for developed country. Don’t increase your own population, that would divide total productivity by more people. Instead let other countries carry the burden of population increase and just select those individuals that are researches from their economies and insert them into your economy.

So the home economy doesn’t need to increase population, it doesn’t carry the burden of all the non-researchers produced to get a single researcher, or idea. Even though ideally a world economy would let everyone benefit from the ideas of researchers immigrating, in reality barriers to idea flow mean that only particular economies benefit from new ideas, and those economies that capture more ideas will grow faster.

This is very important, another way that international system contributed to underdevelopment, I just wish I could model it.