Finding Needles in Haystacks: Artificial Intelligence and Recombinant Growth

42 Pages Posted: 23 Apr 2018

See all articles by Ajay Agrawal

Ajay Agrawal

University of Toronto - Rotman School of Management; National Bureau of Economic Research (NBER)

John McHale

Smith School of Business

Alexander Oettl

Georgia Institute of Technology - Strategic Management Area

Date Written: April 2018

Abstract

Innovation is often predicated on discovering useful new combinations of existing knowledge in highly complex knowledge spaces. These needle-in-a-haystack type problems are pervasive in fields like genomics, drug discovery, materials science, and particle physics. We develop a combinatorial-based knowledge production function and embed it in the classic Jones growth model (1995) to explore how breakthroughs in artificial intelligence (AI) that dramatically improve prediction accuracy about which combinations have the highest potential could enhance discovery rates and consequently economic growth. This production function is a generalization (and reinterpretation) of the Romer/Jones knowledge production function. Separate parameters control the extent of individual-researcher knowledge access, the effects of fishing out/complexity, and the ease of forming research teams.

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Suggested Citation

Agrawal, Ajay and McHale, John and Oettl, Alexander, Finding Needles in Haystacks: Artificial Intelligence and Recombinant Growth (April 2018). NBER Working Paper No. w24541. Available at SSRN: https://ssrn.com/abstract=3167055

Ajay Agrawal (Contact Author)

University of Toronto - Rotman School of Management ( email )

105 St. George Street
Toronto, Ontario M5S 3E6 M5S1S4
Canada

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

John McHale

Smith School of Business ( email )

Smith School of Business - Queen's University
143 Union Street
Kingston, Ontario K7L 3N6
Canada

Alexander Oettl

Georgia Institute of Technology - Strategic Management Area ( email )

800 West Peachtree St.
Atlanta, GA 30308
United States

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