Socially optimal North--South capital transfer and technology diffusion
AbstractWe study North--South capital transfer and the diffusion of embodied technologies within a framework of intertemporal global welfare maximization. We show saddle path stability and characterize the steady state. We then examine the transition path by running numerical experiments based on realistic data. As a result, technology diffusion will succeed if the absorptive capacity is sufficient which requires sufficient investment. While a large share of capital is allocated to the South in early periods, this share declines in later periods when the South has caught up in terms of technologies.
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Bibliographic InfoArticle provided by Taylor & Francis Journals in its journal The Journal of International Trade & Economic Development.
Volume (Year): 21 (2012)
Issue (Month): 6 (December)
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Web page: http://www.tandfonline.com/RJTE20
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