Title: Optimal feedbacks in techno-economic dynamics

Authors: Alexander M. Tarasyev, C. Watanabe, B. Zhu

Addresses: Dynamic Systems Department, Institute of Mathematics and Mechanics (IMM), Ural Branch of the Russian Academy of Sciences, ul. S. Kovalevskoi 16, Ekaterinburg 620219, Russia. Department of Industrial Engineering and Management, Tokyo Institute of Technology, 2-12-1 Ookayama, Meguro-ku, Tokyo 152-8552, Japan. Department of Industrial Engineering and Management, Tokyo Institute of Technology, 2-12-1 Ookayama, Meguro-ku, Tokyo 152-8552, Japan

Abstract: The objective of this work is twofold: to design control strategies which optimise production, technology and their rates in a nonlinear model of economic growth; and to demonstrate the significance of this modelling approach by means of an empirical analysis. We formulate a problem of optimal R&D investment for a dynamic model, which binds production to technology. A discounted utility function, which correlates the amount of sales with the diversity in production, gives a criterion of optimality. We use the Pontryagin maximum principle for the design of an optimal nonlinear dynamics. On the basis of the theoretical analysis, we carry out an empirical analysis, which attempts to demonstrate the practical significance of the approach. For Japan|s major manufacturing sectors, we compare optimal and actual levels of R&D intensities and identify sources of ||pseudo innovation|| in high-tech industries

Keywords: economic growth; dynamic optimality principles; optimal investment feedback; evaluation of R&D intensity.

DOI: 10.1504/IJTM.2002.003034

International Journal of Technology Management, 2002 Vol.23 No.7/8, pp.691-717

Published online: 10 Jul 2003 *

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