Question

According to the Solow model of growth, growth, in the long run (the steady-state), determine only by growth in technology. However, in the Solow model, there is nothing about how technology determined. What factors do you think might affect technology in the long run? Justify your answer and explain the implications to the growth in the long run?

Answer 1

Technology is affected by government laws and regulations in sector as well as hypercompetition based forces which might force particular set of technologies to fade off and shut down.

For example 2G network proliferated in 2014 however due to excessive demand for speed and rise of Telecommunications giants and excessive deregulation we see advent of 5G network by 2020.

This helps build positive implications like faster growth amd seamlessness. It helps elimination of redundancies however cost of incubation and innovation is large initially.