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By Jati Sengupta

This publication presents exact empirical research of nations in Asia to envision a number of dynamic types that contain the effect of expertise and options at the evolution and total monetary development.

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Learning by doing is another important channel. The backward and forward linkages foster intersectional interdependence in the developing countries, where the faster growth in the export sector pulls up the other sectors. Young (1991) discussed in some detail how learning by doing spreads the dynamic effect of international trade. He noted two important features of the diffusion process. One is that there exist substantial spillover effects in the development of knowledge capital across industries, with technical innovations originating in particular industries and finding important applications elsewhere, as well as instigating further technical change in other economic sectors.

The dynamics of innovation in Asia is also discussed for countries such as India and China that are likely to play leading roles as technology leaders in the coming decades. indd 22 10/5/2010 11:58:04 AM 2 Innovations and Industry Growth Economic efficiency is the key to the growth of an industry. It may take different forms. Productivity gains, unit cost reduction, quality improvement of inputs and outputs and the diversity of output are some of these forms. In the short run a firm operates with a fixed stock of capital.

Several important implications follow from this model. First, the innovation shocks and technology are endogenous here as they depend on the decisions made by the innovative firms. 17) by following dynamic programming algorithms. Second, the risk aversion factor may limit the rate of unbounded growth for the innovating firms that succeed more continually. Third, a more general process than the Poisson may be considered for the R&D process undertaken by the innovating firms. This aspect of generalizing the Poisson process will be discussed in later chapters.

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