Question

In the long-run equilibrium there will be no growth in income per capita unless there is growth in technology. Discuss factors that could lead to technology growth in the long run.
(Hint: think about learning by doing, investment in human capital, investment in researches and development sector )

Answer 1

In long run equilibrium, it is true that growth in per capita income can be achieved by technological growth. It is not only technological growth but productivity should be raised by that. It is the number of goods and services that a person can produce with updated production techniques. Technological are the only source of long run growth of productivity but the meaning of true and measured growth differs. Some firms works longer hours than other to produce the same number of goods as other firms are producing in lesser number of hours. Factors that lead to technological advancement are investment in education, incubation center, more population with more emphasis on education would give some brilliant minds, new natural resource found which can reduce the time devoted to produce a good, foreign exchange program through which some of the students are exchanged among universities for research such that more diversification can be taken into account (there are the factors apart from you have written)