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Do you accept the argument that research and development is the central cause of economic growth?

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Introduction

Chosen Question 2 of 2: "Do you accept the argument that research and development is the central cause of economic growth? Explain how innovation systems at the national and corporate level have contributed to the development of major industries." Introduction: Every nation strives to increase its level of economic growth for several reasons. It is favourable from a political stand, as the increased standard of living will result in higher tax revenue and less money needed to be spent on social security as well as boosting civilian morale. Corporations will also benefit from economic growth, as it will mean higher sales as peoples disposable income increases. Economic growth is represented by an increase in national output for example over a twelve-month period. But what we have to consider is what role does research and development play in this process, and whether there are any other factors that have to be considered. Since the post-war period the spending on research and development (R&D) ...read more.

Middle

At this point we can analyse the other methods to gain economic growth. One method to increase the level of potential output is to increase the amount of resources available. For example the nations output depends on its stock of capital, and an increase in its stock will increase output. Increasing the amount of land and raw materials used can also generate a limited amount of growth. Supply side policies can also be used to raise the natural levels of output and employment by providing incentives to greater work effort along with risk taking to remove impediments, which might be blocking competition. One example is to increase privatisation as the private sector is seen as more efficient than the public sector. It is argued that a return of assets to private ownership will increase aggregate output. Also decreasing the rate of income tax will also have the effect of encouraging saving and increase work effort. Increased competition and deregulation will help increase mobility and efficiency. ...read more.

Conclusion

This is reflected also by some traditions for example the technocratic tradition that believe innovation and economic success go together. If we continue to look at the case of Britain we can also conclude that it has declined in its level of innovativeness, and since 1870 the level has dropped significantly which can be reflected by the demise of the manufacturing sector. An excellent example of innovative systems helping major industries to grow can be shown by the examples of the use of robots in the form of machine tools to do jobs on the production lines that humans would be less efficient at. For example the spraying of cars and the welding of parts are universally done by robot arms now. This has made the car industry grow as it saves both time and money. This is shown as the robot arm does not have to be paid or be given breaks, and will not be affected by social or political factors like normal workers. ...read more.

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