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Directed technological change, energy and more: a modern story

Published online by Cambridge University Press:  05 March 2020

Zheng Hou Open the ORCID record for Zheng Hou [Opens in a new window] ,
Catarina Roseta-Palma  and
Joaquim J.S. Ramalho
Zheng Hou*
Affiliation:
Business Research Unit, ISCTE-Instituto Universitario de Lisboa, Lisbon, Portugal
Catarina Roseta-Palma
Affiliation:
Department of Economics and Business Research Unit, ISCTE-Instituto Universitario de Lisboa, Lisbon, Portugal
Joaquim J.S. Ramalho
Affiliation:
Department of Economics and Business Research Unit, ISCTE-Instituto Universitario de Lisboa, Lisbon, Portugal
*
*Corresponding author. E-mail: [email protected]
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Abstract

Reliance of modern economic activities on the use of energy, most of which still comes from non-renewable sources, provokes concerns regarding the most efficient utilization of energy inputs in production. While most theory expects directed technological change to be biased towards the non-renewable input, there is rare macro-level evidence that technological change is actually biased towards energy rather than other main inputs. To fill this gap, we apply stochastic frontier analysis to country data regarding output produced with capital, labor and energy, and estimate a set of indicators for technological change. Findings show that technological change is biased the most towards energy in general. In particular, although different groups of countries exhibit various patterns, there is strong evidence that technological change favors energy more than labor. This is in line with the theoretical expectation that technological change ought to be biased towards the non-renewable input rather than the renewable ones.

Keywords

directed technological changeenergyeconomic growthstochastic frontier analysis

JEL classification

Q32: Exhaustible Resources and Economic Development Q43: Energy and the Macroeconomy O33: Technological Change: Choices and Consequences • Diffusion Processes O44: Environment and Growth
Type
Research Article
Information
Environment and Development Economics , Volume 25 , Special Issue 6: The Environment, Resources and Pollution – New Challenges for Economic Development , December 2020 , pp. 611 - 633
Copyright
Copyright © The Author(s), (2020). Published by Cambridge University Press

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