What Will Drive Long-Run Growth in the Digital Age?

Abstract

This paper considers the prospective sources of long-run growth in the future. Historically, in the industrial era and at the early stage of the digital era (which began approximately in the 1980s) the main growth engine is R&D. If in the future all essential production or R&D tasks will eventually be subject to automation, though, the engine of growth will be shifted to the accumulation of programmable hardware (capital), and R&D will lose its prominence. By contrast, if neither production nor R&D tasks will be fully automated, R&D will remain the main growth engine. Additional mechanisms potentially accelerating and sustaining growth are the accumulation of R&D capital (particularly important under partial automation), and hardware-augmenting technical change.