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The impact of technical change and profit on investment in Australian manufacturing

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2008
Type
Conference Paper

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Bloch, Harry and Courvisanos, Jerry and Mangano, Maria. 2008. The impact of technical change and profit on investment in Australian manufacturing, in Chester, L. and Johnson, M. and Kriesler, P. (ed), Contemporary Issues for Heterodox Economics - Proceedings. (Seventh Australian Society of Heterodox Economists Conference, Dec 8 2008), pp. 1-18. The University of New South Wales, Sydney, Australia: Society of Heterodox Economists, The University of New South Wales.
Source Title
Contemporary Issues for Heterodox Economics - Proceedings
Source Conference
Seventh Australian Society of Heterodox Economists Conference
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Curtin Business School
School of Economics and Finance
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The web site of The Australian Society of Heterodox Economists is at: <a href="http://www.economics.unsw.edu.au/nps/servlet/portalservice?GI_ID=System.LoggedOutInheritableArea&maxWnd=T_Heterodox_home">http://www.economics.unsw.edu.au/nps/servlet/portalservice?GI_ID=System.LoggedOutInheritableArea&maxWnd=T_Heterodox_home</a>

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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 post-Keynesian 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 labour saving 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.