US electrification in the 1930s
Carl Kitchens, 29 January 2014
Economists have found that large-scale infrastructure investments tend to increase economic growth and reduce poverty. However, there has been relatively little research on the effects of smaller, more targeted investment projects. This column discusses recent research on the effects of the US Rural Electrification Administration, which provided subsidised loans for connecting farms to the electric grid. Counties that received electricity through the REA witnessed smaller declines in agricultural productivity, smaller declines in land values, and more retail activity than similar counties that did not.
In 1930, fewer than 10% of farms in the US had access to electricity. By the mid-1950s, almost every farm in the country had electricity. While the US was able to extend electricity to its rural locations rapidly over a 25-year period, much of the developing world still remains without electricity today. In 2012, 1.3 billion people lived without electricity worldwide.
Topics: Development, Economic history
Tags: Agriculture, electricity, electrification, growth, infrastructure, investment, subsidies, technology
Is technological progress a thing of the past?
Joel Mokyr, 8 September 2013
Has technological progress slowed down? Have we really picked all the low-hanging fruit? This column argues that technological progress is in fact not a thing of the past. Far from it. There are myriad reasons why the future should bring more technological progress than ever before – perhaps the most important being that technological innovation itself creates questions and problems that need to be fixed through further technological progress. If we rethink how innovation happens, we have every reason to suspect that we ain’t seen nothing yet.
Technological progress has been at the heart of economic growth for two centuries. Some authors, however, have suggested that product and process innovation are running out of steam:
Topics: Productivity and Innovation
Tags: technological progress, technology
Technology and income dynamics: 1800-2000
Diego Comin, Martí Mestieri, 28 May 2013
Cross-country inequality is persistent. This column draws on economic history to explain the mechanisms by which dramatic cross-country differences in income emerge. We can reduce inequality through policies that facilitate the penetration of new technologies in poor and middle-income countries. Such policies can go a long way towards reducing existing cross-country income disparities.
Two-hundred years ago, cross-country differences in income were relatively small. European countries and Western offshoots, what Maddison (2004) called Western countries, were on average 90% richer than the rest.1 By 2000, this income gap had grown to 750%.
Topics: Economic history
Tags: income, technology
Four changes to trade rules to facilitate climate change action
Aaditya Mattoo, Arvind Subramanian, 4 May 2013
Global climate cooperation has collapsed but the need for action has not disappeared. This column argues that only radical technological progress can reconcile climate-change goals with development. It argues that four changes in WTO trade rules could facilitate climate-change action and technological advances without unduly damaging trade.
The research on the links between trade rules and climate-change action has mostly been concerned with how far climate-change action is constrained by current trade rules pertaining, for example, to border-tax adjustments (Horn and Mavroidis 2011), subsidies (Green 2006) and exports of natural gas (Levi 2012 and Hufbauer et al. 2013).
Topics: Energy, Environment
Tags: adaptation, climate change, technology
European data protection: Impact of the EU data-protection regulation
Laurits R. Christensen, Federico Etro, 24 March 2013
The EU is planning to harmonise data protection. This column balances the benefits of harmonisation against the estimated costs to business – especially small and medium-sized enterprises – and the macroeconomic costs more generally. The net compliance costs will perhaps be larger than the EU predicts.
Policymaking and regulation at the centralised level in a union of countries such as the EU require care. Policymakers must strike a careful balance between the benefits of the harmonisation of policies and the costs of accounting for the differing preferences of individual countries (see Dewatripont et al. 1995).
Topics: EU policies, Europe's nations and regions
Tags: data protection, harmonisation, technology
Ageing and productivity: Economists and others
Daniel S. Hamermesh, 20 February 2013
Publishing in economics is a very tough game, especially for young scholars trying to establish a research record while on a tenure clock. This column discusses new research that shows the age profile of authors in top journals has distinctly shifted away from young scholars. In 1993, half the authors of top-level articles were under 35 and 90% were under 50. Today, only a third are under 35.
Sixty years ago, Harvey Lehman published a path-breaking book examining the lifecycle of productivity in various fields, scientific, humanistic and artistic (Lehman 1953). He demonstrated the now widely accepted conclusion that the contributions of mathematicians and people in mathematics-related disciplines peak very early in their careers.
Topics: Frontiers of economic research, Productivity and Innovation
Tags: academia, age, economists, Nobel, research, technology
Reallocation and Technology: Evidence from the U.S. Steel Industry
Allan Collard-Wexler, Jan De Loecker, 3 February 2013
This paper measures the impact of the minimill, a drastic new technology for producing steel. The authors find that the sharp increase in the industry's productivity is linked to this new technology, and operates through two distinct mechanisms. First, minimills displaced the older technology, called vertically integrated production, and this reallocation of output was responsible for a third of the increase in the industry's productivity. Second, increased competition, due to the expansion of minimills, drove a substantial reallocation process within the group of vertically integrated producers, driving a resurgence in their productivity, and consequently of the industry's productivity as a whole.
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Topics: Industrial organisation
Tags: competition, productivity, reallocation, technology
Health insurance, innovation, and technology adoption
Joan Costa-i-Font, Alistair McGuire, Victoria Serra-Sastre, 19 January 2013
Although healthcare innovation can make treatment cheaper, it can also make policy decisions more difficult by introducing new, better but more expensive technologies. This column argues that, unlike other technologies, healthcare technology is intermediated by insurance mechanisms, both private and public. Although health insurance coverage incentivises expenditure on innovation, it does not seem to heighten technology adoption, a challenge to the idea that innovation increases healthcare costs. Indeed, evidence suggests that technology diffusion is limited by other institutional barriers.
With government budgets under pressure in mature economies, burgeoning healthcare expenditures are under scrutiny. In this light, healthcare innovation can either help by developing new cheaper treatments or make healthcare policy decisions more difficult by introducing new, better but more expensive technologies.
Topics: Health economics
Tags: health, research and development, technology
Can trade policy set information free?
Susan Ariel Aaronson, 22 December 2012
The internet is an expanding opportunity for growth. This column argues that in recent years, however, policymakers and market actors have been undermining its potential. Governments and market actors are reducing both access to information and freedom of expression, as well as moving towards a splintered, non-global internet. Commitment to an open, free and global internet will be hard, but if bilateral, regional or multilateral trade agreements encourage interoperability, we might see some harmony among signatories’ privacy, online piracy, and security policies.
Although the internet is creating a virtuous circle of expanding global growth, opportunity, and information flows (Lendle et al. 2012), policymakers and market actors are taking steps that undermine access to information, reduce freedom of expression and splinter the internet (Herald 2012).
Topics: Frontiers of economic research, International trade
Tags: globalisation, internet, technology, trade
Heavy technology: The process of technological diffusion over time and space
Diego Comin, Mikhail Dmitriev, Esteban Rossi-Hansberg , 26 November 2012
Geographical distance is a fundamental impediment to virtually all economic transactions. This column, using data on technology adoption in 161 countries over 140 years, argues that it also inhibits the spatial diffusion of technology. Moreover, it shows that technology spreads like an epidemic. As more people adopt a technology, the importance of distance to the technological leader diminishes until it eventually becomes irrelevant.
Distance is a fundamental impediment to virtually all economic transactions. Naturally, higher freight costs make trading goods more expensive, and higher migration costs prevent people from moving to other areas where they might have better opportunities of employment. The examples of the importance of distance for economic interactions abound.
Topics: Development, Productivity and Innovation
Tags: distance, technological diffusion, technology