I am trying to get a better grip on the literature on directed technical change and induced technical change. In other words, I am trying to understand if these concepts are the same and used interchangibly in the literature to refer to endogenous technical change.

Also, can anyone please point to a good review of the literature on this topic(s)?


1 Answer 1


Directed technical change is the relatively recent name for what it was was previously called Induced technical change.

Informal discussion about the endogenous direction of technical change was first discussed (but not "microfounded") by Hicks (1932) and Fellner (1961). Yet, it was Kennedy (1964) who first proposed a formal model about endogenous technical change (previous examples like Solow (1957) assumed exogenous technical change).

The more recent denomination of directed technical change was proposed by Acemoglu (2002). This author has plenty of material about the topic:

  • these very comprehensive slides (also here, and why not, see all the material he shares here).

  • The 2002 paper on the subject

  • Chapter 15 of his book on economic growth

You can also see more about the historical literature on induced technological change here and here.

  • $\begingroup$ @london an interesting question though is why Acemoglu decided to change the name. He is clearly aware of the literature (see bottom of page 5 in his 2002 paper), and he uses the name "induced innovations". $\endgroup$
    – luchonacho
    Aug 18, 2017 at 16:49
  • $\begingroup$ so he is using 'biased technical change' and 'directed technical change' to refer to induced technical change. Would it be fair to give credit to Acemoglu for renaming the theory and formalising it? $\endgroup$
    – london
    Aug 18, 2017 at 17:25
  • $\begingroup$ Biased technical change is solely about the nature/outcome of the change, and has been around before the induced/directed literature. Directed technical change refers to the source/mechanism of the technical change in a given model. This is, you could have unbiased or biased technical change in both directed and undirected technical change models. They refer to two different, orthogonal dimensions of technical change. Reg your second point, the theory was formalised already. Acemoglu gave to it a new impulse, and made use of newer/better data to put it to the test, and to study new issues $\endgroup$
    – luchonacho
    Aug 20, 2017 at 8:24

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