Computers might permanently shift the relative payoffs between manufacturing and the process of search and discovery. If that’s correct, then the whole economy will start to look like Microsoft, with a very large fraction of people engaged in discovery as opposed to production. This implies a permanent change in the rate of discovery and the rate of economic growth … Things might never settle back down.
Predictor: Romer, Paul
Prediction, in context:In a 1995 article for Forbes ASAP magazine, Peter Robinson interviews Paul Romer, the leading proponent of New Growth Theory, a branch of economics that incorporates technology in its formulation of estimates. Robinson writes: ”Romer sees technology as ‘endogenous,’ a central part of the economic system. He holds that although any given technological breakthrough may appear random, technology overall increases in proportion to the resources we devote to it. Traditional theory, by contrast, sees technology as ‘exogenous’ – something so random it might as well drop from the sky. [In Romer’s view] technology can raise returns on investment. This explains why developed countries are able to sustain robust rates of growth instead of encountering the diminishing returns on their investments that traditional theory predicts. [In addition] investments can make technology more valuable and technology can make investments more valuable. If that sounds like a circle, it is – a virtuous circle that can raise an economy’s growth rate permanently, a possibility that traditional theory rejects … [Romer said:] ‘Computers might permanently shift the relative payoffs between manufacturing and the process of search and discovery. If that’s correct, then the whole economy will start to look like Microsoft, with a very large fraction of people engaged in discovery as opposed to production. This implies a permanent change in the rate of discovery and the rate of economic growth … Things might never settle back down … If we didn’t keep finding new ideas, there really would be limits to growth. It’s ideas – the whole process of discovery – that cause growth.”
Biography:Paul Romer, a professor of economics at Stanford University, was named one of America’s 25 most influential people by Time magazine in 1997. His papers include “Science, Economic Growth and Public Policy” (in Technology, R&D, and the Economy, Brookings Institution and American Enterprise Institute, 1996), and he wrote a number of articles on technology and growth. (Research Scientist/Illuminator.)
Date of prediction: January 1, 1995
Topic of prediction: Economic structures
Subtopic: General
Name of publication: Forbes ASAP
Title, headline, chapter name: Paul Romer
Quote Type: Direct quote
Page number or URL of document at time of study:
http://web8.epnet.com/citation.asp?tb=1&_ug=dbs+0%2C1%2C2%2C3%2C4+ln+en%2Dus+sid+3563D23E%2D0959%2D4AF2%2DA29E%2DBA529B43B6A7%40Sessionmgr4%2DSessionmgr3+C1E4&_us=bs+Paul++Romer+ds+Paul++Romer+dstb+ES+fh+0+hd+0+hs+0+or+Date+ri+KAAACB3A00066385+sm+ES+ss+SO+2CB4&fn=1&rn=2
This data was logged into the Elon/Pew Predictions Database by: Severs, Timothy B.