The Choice of Techniques
Until now, we concentrated primarily on the dynamics of quantities and prices and their relations in economic development — within the framework of multiple sector models. Technologies have been described by neoclassical production functions or by assuming constant input coefficients. Little emphasis has been placed upon the way in which techniques can be selected from amongst various alternatives within a given technology, and nothing has been said about the way in which technological change takes place and the impact which it may have upon economic growth. In the remainder of this study, we focus upon the dynamic relations between various forms of technology and economic development. In this chapter we restrict our attention to the problem of the “choice of (exogenously given) alternatives or techniques”. Endogenous forms of technological change will be dealt with in Chapters VII and VIII.
KeywordsInterest Rate Real Wage Capital Good Competitive Equilibrium Switching Point
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