Chapter 5 Flashcards
(27 cards)
Define GPT
- pervasive ( It has to cover many sections of the economy (E.g. The cotton spinning technology transformed an industry and related industry but it was not pervasive because it was only used for cotton spinning) )
- has many complementarities (Reach out to different parts of society and it has to complementary with many things, such as management change)
- wide ranging productivity effects (Drive growth).
- May not have any initial uses: They are so big and complex people initially don’t understand how to use or implement them
- As a result, it may take a long time to have positive effects. Long time before they are used means a longer time before they even have an effect
What are the requirements for GPT?
- The GPT needs to be someone who designs it
- GPT may have to be embodied in machines. For instance, steam engine can be used to move stuff across the land but first a steam powered railway needs to be built. (Not always but generally)
- GPT may require new working practices. There needs to be people who can work the machines. This can make people redundant or increase returns.
- Output slowdown: Where resources (labour) are dedicated towards the R&D (no rent) and diverted from monoplistically competitive sector (rent). Once there are enough components developed for the productivity of the new GPT, the old one is replaced
- Free trade accelerates adoption
Where was steam used?
Initially used in mining industry to extract water from mines and then adapted to factories and then railways and steamships
Railways were first as initial steam engines were inefficient (coal per mile was high). Steamship storages were taken up by large amounts of coal to supply long distances.
Story of the steam engine
- Invention by James Watt 1796
- 60 years between invention and application
- By 1830, steam catches up with water as the primary power source in Great Britain. (1.5% of total capital stock) Steam contributes to a 20-fold rise in power generated by 1990.
- 1850: Steam became cheaper in most places
What happened to the maximum pressure of steam between 1850 to 1900 in the textile mills?
1850: 60 psi
1900: 200psi
Improvements were reflected in the declining cost of steam
Steamships
- 1900: Boiler pressure of 200 p.s.i were able to quadraple expansion engines
- Alongside improvements in meterallugy (High pressure engines need strong metal)
- Larger ships and cheaper journeys
Early 19th century: Steamships consumed 10lbs of coal per hour
1850: High pressure system only neeeded 5lbs of coal per hour
1870: 1.25 lbs per hour
Development of railways
1830: Railway opened in Liverpool + Manchester.
1850: Core routes put in place + 7,000 miles of track available.
1855: Capital stock =30% of GDP.
Not transformative as it was a small relative to GDP but still impactful.
How did Cornish engineers improve the steam engine?
savings of coal inputs worth £84,300 per year
When was the Corliss steam engine maded?
1861
80 years after Watts steam engine
Impacts of GPT
- Reduced costs in the downstream application
- Improved prosducts
- New supporting components are produced
- Deep structural adjustments - Major changes
- Steam changed factories patterns
- Economies of scale
GPT Langauge
Helped develop a standard language + protestant revolution = more people could read due to their promotion of such + protestant message spread through printing. Falling cost of printing = increase in knowledge + downfall of knowledge monopolies. Dutch was tolerant to increasing knowledge and printers (many exiled in Europe moved their) and therefore information network based on large scale cheap printing = productive efficency and tax revenues. Key parts in success in war with Spain and rivalry with Britain was due to its liberal attitude to printing
Capital deepening
Increasing capital per worker
TFP
Measure of how productive each unit is, captures contributions by labour and all factors. Estimate from econometric regression and the residual part is the TFP section.
Social savings
Gain by society from adopting a GPT. Difference between the cost of existing old technology and the cost of new technology.
GPT Examples
- Horse power
- Language
- Electricity - Continuously getting more efficient, took time to adopt, groundbreaking
- Printing - Getting more efficient, used holistically (printing money, currency, books) and had massive impacts on productivity
- Water wheel
- Combustion engine
Impact of Watts railway and steamships
What was the cost of 1HP of steam power?
1760: Over £40
1910: Below £20
ICT Development
Mid 1940s:
- ENIAC
- Had 19 000 vacuum tubes; weighed 30 tons; used 200 kW of energy
- Individually designed computers and built on site, made to order
Mid 1960s:
- IBM 360
- First mass produced computer, standardised, worked by punch cards
1981:
- IBM PC
- First modern PC
2003:
- Blackberry
- Integrated phone and email with very basic web
2007:
- iPhone, miniaturisation
- App store came a year later and sped up pervasiveness as apps became more widespread
*Quick for others to catch up
How did the high pressure system reduce coal usage?
30 pounds to 2 pounds
Waterwheels
During the medieval period the spreading use of the waterwheels led to the mechanization of european manufacturing
The waterwheel went through many improvements. In particular, the cam, which turned rotary movements into linear movements
Ozylko:
General purpose technologies are very important in influencing economic growth, however the investments made need to be effective in order to sustain economic growth. Proper regulation needs to be put in place to avoid corruption.
Paul A. David’s article:
GPTs drastically influence economic growth only when introduced and implemented correctly. (this may be the responsibility of the managers and manufacturers)
Endogenous to the economic system
New GPT acts as a response to the profit opportunities created by a ‘crisis’ in existing GPT.
For example, Newcomen’s atmospheric engine was invented as a response to the need to pump water out efficiently out of deepening mines
Exogenous to the economic system but endogenous to science:
When GPT is created for non-profit related motives but rather scientific curiosity.
For example, the use of electricity as a power delivery system resulted from discoveries in the 17th and 18th centuries from a research program which was driven by scientific curiosity.
