WL20: UK Growth and Technology

 


23 June 2026 Britain Is Still Deep in the Shadow of Brexit: Ten years after a slim majority voted to leave the European Union, the economic and political effects of that decision continue to disrupt the United Kingdom.


In a prior posts, I found that (1) The UK is one of the countries (here) likely to become a Steady-State Economy and (2) The 2025 Technological Prosperity Deal between the US and the UK was likely an attempt to head off the steady state. The graphic above shows the effect of Technical Efficiency (TECHE) and Technical Productivity (TECHP) on growth of the UK Economy (UK1). 

Concentrating only on Technical efficiency (TECHE) puts the UK economy in Growth-and-Collapse mode, while concentrating on Technical Productivity (TECHP) moves the economy toward a Steady State after 2100.

The new UK Labor Government, formed after Prime Minister Starmer's resignation, seems to be concentrating on Efficiency in the Public Sector, the goal being to cut the cost of pubic goods. After Brexit, it was assumed that freedom from European Union (EU) Regulation would stimulate private sector efficiency. Evidently, simply leaving the EU was not enough. As the graphic above shows, improving UK productivity will be a long, slow process extending past 2100.



Notes






Neoclassical Growth TECH Theory




The causal structure for the  Solow-Swan or Cobb-Douglas production functions take population growth (N) and Technology (TECH) as exogenous to the employment (L), production (Q) and Capital formation (K) processes. The causal model predicts that if either Population Growth or Technology change reach an equilibrium that the system will reach a steady state. The assumption is that Technological change will never cease.

UKL20 Measurement Model


UK1 = (Growth-CO2-LU),  a growth controller.

TECHP Productivity Measurement Matrix


TECHP1 = (GDP/N - L/N - CO2/N) a productivity-unemployment emission controller. TECHP2 =  (E/N + CO2/N - L/N) an energy-emission-employment controller. TECHP3 = (Growth).

TECHE Efficiency Measurement Matrix

TECHE1 = (GDP/N - E/GDP - CO2/E - L/N), a productivity-energy-emission-employment controller. TECHE2 = (L/N   + GDP/N - E/GDP) an employment-productivity-energy controller. TECHE3 = (CO2/E + GDP/N -E/GDP - LN) an emission-productivity-energy-employment controller.

AIC Statistics


Of the two Technology models, TECHP and TECHE, the AIC Statistic for TECHP is somewhat better (smaller). The best overall model for the UKL20 system takes Globalization (the KOF index as input, but the model is unstable. The TECH models are two stable models, along with linking to the World System (WL20).

UKL201 RW


The Random Walk comparison model.

UKL201 TECHP Input


The TECHP input made as one negative input, TECHP2 =  (E/N + CO2/N - L/N) an energy-emission-employment controller. 



UKL201 TECHE Input


The TECHE input model has all positive inputs with TECHE1 = (GDP/N - E/GDP - CO2/E - L/N), a productivity-energy-emission-employment controller, being the largest input.





Comments

Post a Comment

Popular posts from this blog

Technological Change in Israel: World-System (1960-2100)

Image
  Israel is a World-System leader in Technological Change . Google AI Notes: However, the description has been challenged: The Myth of Israel Innovation . Using the IL_L20 Models, the hypothesis of Israel TECH dominance can be tested.  The best short-term model, using AIC Statistics to make the selection, was the Business-As-Usual ( BAU) Model. The best Attractor Path model was the Regional Input ( MEA ) model. Neither TECHP (Productivity) nor TECHE (Efficiency) models were strong competitors (see the graphic above).   This post compares the models: BAU Model  In the Business-as-Usual model, technological change is measured by the coefficient on the Growth Component (the  Learning by Doing  coefficient ( F [2,2] = 1.02477066 in the IL_SYS BAU Model ). It is the primary driver of instability in the System. The BAU model is also cyclical  with  Eigenvalues   = 1.053345+0.0000000i 0.941244+0.0579742i 0.941244-0.0579742i. To create unlimite...
Read more

World-System (1960-2100) WL20 Technology Growth Paths

Image
The 2025 Nobel Prize in Economics was awarded for both advances in our theoretical and  historical understanding of Technological Change . One reading of the work by  Joel Mokyr ,  Philippe Aghion  and  Peter Hewitt  is that new discoveries created by the random historical process of invention will always provide the technologies (through Creative Destruction ) necessary for continued, exponential economic growth.  The forecast above, generated by different WL20 Models , shows that emphasis on Technical Efficiency ( TECHE ), particularly reducing Emission Intensity (CO2/EG), provides the best future growth path for the World System. Economic Theory seems to be mostly focused on Technical  Productivity ( TECHP ). The historical work for this  Cornucopian  conclusion about the Future ( Joel Mokyr )  was based on studying the Industrial  Revolution during the period 1500-1700. The theoretical work ( Philippe Aghi...
Read more

World-System (1950-2150) Stable French Technology Cycles

Image
   The 2025 Nobel Prize in Economics ( here ) was awarded for having explained the role of innovation and  Creative Destruction  in  Sustained Economic Growth . Particularly interesting (to me) was the Aghion and Hewitt paper   A Model of Growth Through Creative Destruction , which won them part of the Prize. Does the 2025 Nobel Prize have anything to say about current French economic development and political instability? I have two explicit models for technological change, one for Productivity change ( TECHP ) and another for Efficiency change ( TECHE ). The models are based on  State Space  indexes (see the Notes below) constructed using  Principal Components Analysis  ( PCA ). The  Phase Space  for the FR TECHE model is displayed above. The  Phase Space  for the FR TECHP model is displayed below. Both models are cyclical and stable with periods of over a Century (see the  Notes  ...
Read more