Technology Life-Cycles and Endogenous Growth

I develop a growth model in which R&D resources can be directed either to the discovery of new technologies (inventions) or to the improvement of the quality of machines without altering their underlying technology (innovations). Learning-by-doing is an important determinant of the relative share of resources allocated to inventive versus innovative activity. The dynamics generate endogenous economic growth driven by cycles of technological change where the pattern and timing of technological improvements are consistent with historical evidence. That is (a) inventions and innovations play a complementary role in expanding the technology frontier; (b) when inventions occur they tend to arrive in clusters; and (c) a life-cycle of technologies during the early stages of which a discovery is followed by a period of rapid economic growth and innovation, and the late stages of which dwindling innovations and slower growth set the stage for new discoveries