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Innovation, obsolescence and profit as drivers of investment in Australian manufacturing

Access Status
Open access
Authors
Bloch, Harry
Mangano, Maria
Courvisanos, Jerry
Date
2009
Type
Conference Paper

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Citation
Bloch, Harry and Mangano, Maria and Courvisanos, Jerry. 2009. Innovation, obsolescence and profit as drivers of investment in Australian manufacturing, in Prof Jonathan Pincus (ed), 38th Australian conference of economists, Sep 28 2009. Adelaide, South Australia: The economic society of Australia (SA branch)
Source Title
Proceedings of the Australian conference of economists, 2009
Source Conference
38th Australian conference of economists
Faculty
Curtin Business School
School of Economics and Finance
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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.