The Impact of New-Product R&D on the Circular Flow

Abstract

Closed-system circular flow models have been ubiquitous in economics for at least half a century. Because these models account for neither new-product R&D, nor the attendant leakages and injections, they obscure understanding of (a) the distinction between new-product and process R&D, (b) the circular flow leakages and injections attending new-product R&D, and (c) Schumpeterian “creative destruction” and “swarming.” To shed light upon these matters, we present an open-system circular flow model and a price theoretic explanation of the swarming overinvestment that characterizes business cycle downturns. JEL Classifications: B20, O31, E30

Intangible Assets and Crash Risk: The Case of Low Intellectual Capital Firms in Indonesia

“…Intangible assets represent innovation because those assets contain successful R&D and acquisition of intellectual property rights. According to McClure and Thomas (2019), R&D creates new avenues for the production of goods and services. These resources significantly contribute to the productivity and innovation systems of businesses.…”