Embedded Technology and Economic Growth

Abstract

It is shown in the present paper that embedded technology leads to higher economic growth. In other words, if the share of labor cost in value added is decreased then economic growth increases. It should be noted however that a decline in the share of labor cost in value added does not necessarily imply that the nominal wage is decreased, but instead it means that higher portion of technology is embedded in the value added. Statistics have shown that an increase in nominal labor costs is not the reason for a slow economic recovery, but the share of labor costs in the value added, which is the crux of the present article.