ENDOGENOUS TECHNOLOGICAL INNOVATION, CAPITAL ACCUMULATION AND DISTRIBUTIONAL DYNAMICS

This paper develops a post-Keynesian dynamic model of accumulation, growth and distribution in which endogenous technological innovation plays a significant role. Firms' rate of labour-saving technological innovation is made to depend non-linearly on the distributive (wage and profit) shares, with the latter determining both the incentives to innovate and the availability of funding to carry it out. As it turns out, the direction and the intensity of the effect of a change in distribution on the rates of accumulation and growth depend on the prevailing distribution, with a similar dependence applying-alongside the relative bargaining power of capitalists and workers-to the dynamic stability properties of the system. Hence, the model does not rely on full capacity utilization being reached for a change in the accumulation and growth regime to take place. Copyright Blackwell Publishing Ltd 2004.