What will drive global economic growth in the digital age?

Abstract

Abstract This paper provides a theoretical investigation of possible sources of long-run economic growth in the future. Historically, in the industrial era and during the ongoing digital revolution (which began approximately in the 1980s) the main engine of global economic growth has been research and development (R&D), translating into systematic labor-augmenting technological progress and trend growth in labor productivity. 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. Economic growth will then accelerate, no longer constrained by the scarce human input. By contrast, if some essential production and R&D tasks will never be fully automatable, then R&D may forever remain the main growth engine, and the human input may forever remain the scarce, limiting factor of global growth. Additional studied mechanisms include the accumulation of R&D capital and hardware-augmenting technical change.