Garicano, Luis and Rossi-Hansberg, Esteban (2012) Organizing growth. Journal of economic theory, 147 (2). pp. 623-656. ISSN 1095-7235
We propose a framework to study the impact of information and communication technology on previous termgrowthnext term through its impact on organization and innovation. Agents accumulate knowledge to use available technologies and invent new ones. The use of a technology requires the development of organizations to coordinate the work of experts, which takes time. We find that while advances in information technology always increase previous termgrowth,next term improvements in communication technology may lead to lower previous termgrowthnext term and even to stagnation, since the payoff to exploiting available technologies through organizations increases relative to the payoff from developing new innovations.
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