Technological obsolescence goes hand in hand with economic growth

The growth in the Gross Domestic Product (GDP) of countries is largely linked to technological advance, because the latter encourages productivity. This technological advance is often associated with capital owing to the replacing of machinery and equipment that it entails. This firstly influences the fact that capital accumulation increases a country’s GDP, and secondly, the fact that the capital depreciates because the existing machinery becomes obsolete. Therefore, it has been proven that the countries with high capital depreciation have in the long term a high growth rate. A UPV/EHU researcher has built an economic model that takes this positive correlation into consideration. Her research has been published in the journal Economic Modelling. —> Read More