Template-Type: ReDIF-Paper 1.0 
Title: The Hardware-Software Model: A New Conceptual Framework of Production, R&D, and Growth with AI
Author-Name: Jakub Growiec 
Abstract: The article proposes a new conceptual framework for capturing production, R&D, and economic growth in aggregative models which extend their horizoninto the digital era. Two key factors of production are considered: hardware, including physical labor, traditional physical capital and programmable hardware, and software, encompassing human cognitive work, pre-programmedsoftware, and artificial intelligence (AI). Hardware and software are complementary in production whereas their constituent components are mutuallysubstitutable. The framework generalizes, among others, the standard modelof production with capital and labor, models with capital–skill complementarity and skill-biased technical change, and unified growth theories embracingalso the pre-industrial period. It offers a clear conceptual distinction betweenmechanization and automation as well as between robotization and the development of AI. It delivers sharp, economically intuitive predictions for long-rungrowth, the evolution of factor shares, and the direction of technical change
Number: 2019-042
Length: 31 pages 
Creation-Date: 2019-02
Keywords: production function, R&D equation, technological progress, complementarity, automation, artificial intelligenc
Classification-JEL: O30, O40, O41
File-URL: https://hdl.handle.net/20.500.12182/1120
File-Format: Application/pdf
DOI: 10.33119/kaewps2019042
Handle: RePEc:sgh:kaewps:2019042