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Chapter 1 Economic Growth

Chapter 1 Economic Growth . BUS 435 Rick Christoph. Technology Innovation. The impact of all Innovations from day 1 have been forecast incorrectly The Internet seems to have missed the mark – is this true?

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Chapter 1 Economic Growth

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  1. Chapter 1 Economic Growth BUS 435 Rick Christoph

  2. Technology Innovation • The impact of all Innovations from day 1 have been forecast incorrectly • The Internet seems to have missed the mark – is this true? • Example: When radio was first commercialized, David Sarnof wondered how to make money with it. How did he?

  3. The story of radio • Radio began in the late 1800’s but with very limited use • Sent a “spark” – long spark was a dash, short a dot • It was mathematically proved that radio signals could only go 50 miles due to curve of earth • In 1901, Marconi proved ‘em wrong

  4. Radio • Still, sparks were not very exciting! • In 1911, DeForest was sued for selling shares in a fraudulent concept … what was it? • It enabled voice and music to be sent! • By 1923, Sarnof was trying to popularize the radio. He set up a small company called …..

  5. Radio • How could Sarnof make money with radio? List your ideas. • What does this mean to us? • Technology advances are unpredictable • Advances build on each other in unexpected ways. • To be successful, you must have an open mind to failure.

  6. Other examples • Bridge construction • The railroad • The automobile self-starter • The telephone • The computer • The impact of all have been poorly forecast. Why?

  7. Economic Growth • How does growth happen? • What if we run out of resources? • Has it ever happened? • How about over-population? • Haven’t you heard that you consume too much gas, food, air, etc.? • Finally, can innovation create growth?

  8. The key may be Economics • How are resources allocated in a market society? • Supply and demand, right? How? • But what if we run out?? • This becomes a classic economics problem.

  9. The Gas Crisis (1974) • We had huge lines to get gas. • Rationing began! • We were out of gas, right? • Well, it went way up in price! • How much was a new car – a Chevelle? • How much is a new Lumina today? • How about gas?

  10. The Limits to Growth • In the ’70’s, the Club of Rome predicted doom, and gloom by the year 2000 • We would be hungry, cold, poor! • The environment would be a disaster! • Over population would cause huge wars, famine, disease! • What really happened? Why?

  11. What happened? • In a word, Productivity! • Most of this was caused by innovations unheard of in the ’70’s! • Consider agriculture. Who ever heard of “Roundup Ready” beans in 1970? • An “economy car in 1970 (VW Beetle) got 25 mpg and was a hazard to drive. • Today, cars like that get 40+ and are much safer.

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