About the Influence of Multiplicative Effects of Technological Innovations on the Dynamics of Economic Growth: The Role of N.D. Kondratiev’s Studies

Abstract

Russian scientist N.D. Kondratiev (1892–1938) is considered as a founder of the theory of macroeconomic dynamics and the author of original models of economic growth based on the assessment of the impact of the science & technology progress and multiplicative effects of technological innovations. While economists of his time either avoided to consider the contribution of the science & technology progress in the economy or considered it as an exogenous factor, Kondratiev demonstrated the reasons why this factor was endogenous and why the distinguishing line between the processes involved in invention and implementation was so important.

The article aims to show the Kondratiev’s contribution in developing the theory of multiplicative macroeconomic effects from innovations considering the pattern of effects from technological development for the dynamics of the national economy’s growth and respective macroeconomic parameters, proposed by him. The Kondratiev’s model of economic dynamics, scrutinized in the article, shows theoretically the impact of technological development and innovation on macroeconomic processes.

The Kondratiev’s model demonstrates that macroeconomic development will inevitably be slower if no technical and technological change is brought into the production process: a conclusion to be rediscovered by “classical” macroeconomists two decades after Kondratiev. So, the Kondratiev’s mode does not contradict “classical” model of multiplier theory by J. Keynes and the economic development theory of J. Schumpeter. The vision of multiplicative effects of innovations by Kondratiev and Schumpeter were by large similar and complementary. Each of them regarded technological development and innovation is the key driver of the socio-economic advancement and the nation’s well-off, although many nuances were seen by them differently: the economic impact of science & technology progress was believed to be exogenous by Kondratiev and endogenous by Schumpeter.