Innovation, Obsolescence and Profit as Drivers of Investment in Australian Manufacturing

20 Pages Posted: 10 Dec 2009

See all articles by Harry Bloch

Harry Bloch

Curtin University of Technology - Curtin Business School - School of Economics and Finance

Jerry Courvisanos

University of Ballarat

Maria Mangano

Curtin University

Date Written: December 9, 2009

Abstract

This paper combines Salter’s analysis of capital-embodied technical change with Kalecki’s analysis of financing investment from retained profits to provide a model of investment with innovation, which is applied to data from Australian manufacturing industries. In the estimated model, profit is used as a measure of the ability to invest, and the rate of technical change embodied in new equipment (i.e. process innovation) reveals the inducement to invest. These two factors combine to explain the accumulation process and its link to technical progress.

Keywords: embodied technical change, Salter, Kalecki, vintage capital, investment

JEL Classification: E22, L16, 031

Suggested Citation

Bloch, Harry and Courvisanos, Jerry and Mangano, Maria, Innovation, Obsolescence and Profit as Drivers of Investment in Australian Manufacturing (December 9, 2009). Available at SSRN: https://ssrn.com/abstract=1520855 or http://dx.doi.org/10.2139/ssrn.1520855

Harry Bloch (Contact Author)

Curtin University of Technology - Curtin Business School - School of Economics and Finance ( email )

Curtin University
GPO Box U 1987
Perth, 6845
Australia
+61 8 9266 2035 (Phone)
+61 8 9266 3026 (Fax)

Jerry Courvisanos

University of Ballarat ( email )

Australia

Maria Mangano

Curtin University ( email )

GPO Box U1987
Perth, WA WA
Australia

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