World-System (1960-2100) Technological Change in the United Kingdom

On September 18, 2025 Donald Trump and Keir Starmer signed a Technological Prosperity Deal between the US and the UK covering joint technological advancement. Aside from giving the US President a chance to ride in the Golden State Carriage with King Charles, what was the motivation for the visit and the Technological Prosperity Deal?

The Economy of the UK is driven by Technological Productivity (TECHP) change;  without accelerated Technological Productivity growth, the UK is facing a Steady State Economy or even Limits to Growth. 

In this post, I present results from the UKL20_TECHP model to explain the forecast. The TECHP Indicators and index construction are explained in the Notes.

The forecast for a steady state TECHP, with 98% bootstrap confidence intervals, is presented above. There have been spurts of growth in TECHP, one when the UK joined the EC (European Community, precursor to the EU, in1973) and one after Brexit. The first TECHP component, 

TECHP1=(-0.511 co2 + 0.182 e + 0.616 q - 0.571 l)

explains 60% of the variance in the productivity indicators. TECHP1 is an historical feedback controller balancing CO2 emissions per capita (quality of capital, co2) and Employment per capita (l) with Output per capita (q) and Energy per capita (e). In other words, higher quality capital stock (lower CO2 emissions and energy use) is associated with greater productivity and lower employment (capital-labor substitution). The UKL20_TECHP model predicts that this process is reaching a steady state.

The Technological Prosperity Deal is an attempt to put off the steady state and approach the 98% upper confidence interval where TECHP reaches a much higher level, but still a steady  state.

You can experiment with the full TECHP model here.

Notes

The Measurement Matrix for the TECHP state space:

The indicators are co2 (Carbon Dioxide Productivity), e (Energy Productivity), q (Output Productivity) and l (Labor Productivity). TECHP1 explains 60% of the variation in the indicators.

The System matrix for the full UKL20_TECHP model:

The  UKL20 Model Measurement Matrix is presented below (TECHP is one of the better drivers for the UKL20 Model--see the Akaike Information Criterion statistics below). 

The state space components are UK1=(Growth-CO2-LU),   UK2=(CO2+E-Q),     UK2=(L+N+LU+EF-HDI). Note that all the components are historical feedback controllers, particularly Growth (UK1) is controlled by CO2 Emissions and Unemployment (LU).

The models (AIC = Akaike Information Criterion, smaller is better):

• RW Random Walk [11.69 < AIC = 20.71 < 30.63]
• BAU Business As Usual [81.86 <  AIC = 87.22 < 91.8 ]
• W World WL20 Input [34.58 < AIC = 60.83 < 82.67]
• US USL20 Input [29 < AIC =  63.25 < 90.17] 
• UK UK2_UK3 BAU Input [83.88 < AIC = 89.88 < 94.15]
• EU European Union [60.47 < AIC = 79.99 < 97.75]
• TECHP Technical Productivity [27.43 < AIC = 48.29 < 66.77]
• TECHE Technical Efficiency [61.16  < AIC = 73.08 < 82.33 ]