Innovation Policy for Development Manuel Trajtenberg The Israeli National Economic Council, The Prime Minister Office and School of Economics, Tel Aviv University Mt. Veritas Conference June 2007. Plan of talk.
Innovation Policy for Development Manuel TrajtenbergThe Israeli National Economic Council,The Prime Minister OfficeandSchool of Economics, Tel Aviv UniversityMt. Veritas ConferenceJune 2007
Endogenous growth theory: economic forces shaping R&D hence TFP
Solow (1957): Total Factor Productivity (TFP) key to growth
Too little innovation => need Government intervention (e.g. subsidize R&D)
QWhy the failure to innovate for local markets?
fixed cost: R&D
Potentially large surplus