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The Development problem under embodiment

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  • Raouf, BOUCEKKINE

    (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES))

  • Blanca, MARTINEZ

    (Universidad de Alicante)

  • Cagri, SAGLAM

    (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES))

Abstract

We study technology adoption in an optimal growth model with embodied technical change. The economy consists of the final good sector, the capital sector, and the technology sector whose role is the imitation of exogenous innovations. Labor resources are scarce. They are freely allocated to the technology and final good sectors. The final good is freely allocated to consumption and to the capital sector. We analytically characterize the optimal allocation decisions in the long run. Using a calibrated version of the model, we find that an acceleration in the rate of embodied technical change should not be responded by an immediate and strong adoption effort. Instead, adoption labor should decrease in the short run, and the optimal technological gap is shown to increase either in the short or in the long run. The state of the institutions and policies around the technology sector is key in the design of the optimal adoption timing.

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Bibliographic Info

Paper provided by Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES) in its series Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) with number 2003006.

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Length: 28
Date of creation: 01 Apr 2003
Date of revision:
Handle: RePEc:ctl:louvir:2003006

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Keywords: Embodiment; Technology adoption; Technological gap; Transition dynamics;

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References

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  1. Jeremy Greenwood & Boyan Jovanovic, 1998. "Accounting for Growth," NBER Working Papers 6647, National Bureau of Economic Research, Inc.
    • Jeremy Greenwood & Boyan Jovanovic, 2001. "Accounting for Growth," NBER Chapters, in: New Developments in Productivity Analysis, pages 179-224 National Bureau of Economic Research, Inc.
  2. Richard R. Nelson & Edmond S. Phelps, 1965. "Investment in Humans, Technological Diffusion and Economic Growth," Cowles Foundation Discussion Papers 189, Cowles Foundation for Research in Economics, Yale University.
  3. Boucekkine, Raouf & del Rio, Fernando & Licandro, Omar, 2005. "Obsolescence and modernization in the growth process," Journal of Development Economics, Elsevier, vol. 77(1), pages 153-171, June.
  4. Raouf Boucekkine & Fernando del Río & Omar Licandro, 2003. "Embodied Technological Change, Learning-by-doing and the Productivity Slowdown," Scandinavian Journal of Economics, Wiley Blackwell, vol. 105(1), pages 87-98, 03.
  5. Raouf Boucekkine & Blanca Martínez & CARGI SAGLAM, 2003. "Technology Adoption, Capital Maintenance And The Technological Gap," Working Papers. Serie AD 2003-18, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
  6. Robert J. Gordon, 2000. "Does the "New Economy" Measure Up to the Great Inventions of the Past?," Journal of Economic Perspectives, American Economic Association, vol. 14(4), pages 49-74, Fall.
  7. Krusell, Per, 1998. " Investment-Specific R&D and the Decline in the Relative Price of Capital," Journal of Economic Growth, Springer, vol. 3(2), pages 131-41, June.
  8. Grether, Jean-Marie, 1999. "Determinants of Technological Diffusion in Mexican Manufacturing: A Plant-Level Analysis," World Development, Elsevier, vol. 27(7), pages 1287-1298, July.
  9. Greenwood, J. & Hercowitz, Z. & Krusell, P., 1996. "Long-Run Implications of Investment-Specific Technological Change," RCER Working Papers 420, University of Rochester - Center for Economic Research (RCER).
  10. Niosi, Jorge & Hanel, Petr & Fiset, Liette, 1995. "Technology transfer to developing countries through engineering firms: The Canadian experience," World Development, Elsevier, vol. 23(10), pages 1815-1824, October.
  11. Boyan Jovanovic, 1995. "Learning and Growth," NBER Working Papers 5383, National Bureau of Economic Research, Inc.
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Cited by:
  1. Helene, LATZER, 2006. "Foreign Direct Investment and the Nature of the Imitation Process," Discussion Papers (ECON - Département des Sciences Economiques) 2006012, Université catholique de Louvain, Département des Sciences Economiques.
  2. Benteng Zou & Carmen Camacho, 2004. "The spatial Solow model," Economics Bulletin, AccessEcon, vol. 18(2), pages 1-11.
  3. Raouf Boucekkine & Benteng Zou, 2010. "Catching-up with the "locomotive": a simple theory," Working Papers 2010_07, Business School - Economics, University of Glasgow.
  4. repec:ebl:ecbull:v:18:y:2004:i:2:p:1-11 is not listed on IDEAS
  5. Latzer, Hélène, 2013. "Bridging the technology gap with limited human capital resources," Economic Modelling, Elsevier, vol. 35(C), pages 175-184.
  6. Dawid, Herbert & Greiner, Alfred & Zou, Benteng, 2010. "Optimal foreign investment dynamics in the presence of technological spillovers," Journal of Economic Dynamics and Control, Elsevier, vol. 34(3), pages 296-313, March.

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