Technological Opportunity and Growth

The article presents a model of technological opportunity, modeled as a resource that is exhaustible in the short run but renewable in the long run. The exploitation and regeneration of technological opportunity is the result of an interplay between intentional incremental and radical innovations and unintentionally made discoveries. The setting for the basic model is a multidimensional metric space where existing ideas are convexly combined in order to create new ideas. When the basic set theoretical features are included in a long-run R&D model, we derive the implications for paradigm duration as well as for the growth rate of technological knowledge. We show that whereas a larger pool of R&D workers have an ambiguous effect on the short run technological growth rate, it will lead to more frequent paradigm shifts in the long run.JEL classification: O31, O41* I am particularly indebted to Joel Mokyr for an extensive discussion on an earlier draft. I have also received valuable comments from Marcus Asplund, Wlodek Bursztyn, Douglas Hibbs, Lennart Hjalmarsson, Charlie Karlsson, Susanna Lundström, Joakim Persson, Paul Segerstrom, Fabrizio Zilibotti, Lars-Erik Öller, two referees, the editor of this journal, and from seminar participants at the EEAMeeting in Lausanne, Göteborg University, IIES at Stockholm University, Stockholm School of Economics, and FIEF. Generous financial support has been granted by the Wallander-Hedelius Foundation.