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.
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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