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When Does a Developing Country Use New Technologies?

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  • Olivier Bruno

    (University of Nice Sophia-Antipolis, GREDEG-CNRS, CERAM Business School)

  • Cuong Le Van

    (PSE, CNRS, University Paris 1, CES)

  • Beno�t Masquin

    (University of Nice Sophia-Antipolis, GREDEG-CNRS)

Abstract

We develop a model of optimal pattern of economic development that is first rooted in physical capital accumulation and then in technical progress. We study an economy where capital accumulation and innovative activity take place within a two sector model. The first sector produces a consumption good using physical capital and non skilled labor. Technological progress in the consumption sector is driven by the research activity that takes place in the second sector. Research activity which produces new technologies requires technological capital and skilled labor. New technologies induce an endogenous increase of the Total Factor Productivity of the consumption sector. Physical and technological capital are not substitutable while skilled and non skilled labor may be substitutable. We show that under conditions of the adoption process of new technologies, the optimal strategy for a developing country consists in accumulating physical capital first; postponing the importation of technological capital to the second stage of development. This result is due to a threshold effect from which new technologies begin to have an impact on the productivity of the consumption sector. However, we show that once a certain level of wealth is reached, it becomes optimal for the economy to import technological capital to produce new technologies.

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Bibliographic Info

Paper provided by Development and Policies Research Center (DEPOCEN), Vietnam in its series Working Papers with number 12.

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Length: 32 pages
Date of creation: Feb 2008
Date of revision:
Handle: RePEc:dpc:wpaper:1208

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Keywords: Model of optimal pattern of economic development; Capital accumulation; Innovative; Total Factor Productivity;

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Cited by:
  1. Cuong Le Van & Manh-Hung Nguyen & Thai Bao Luong, 2006. "New technology, Human Capital and Growth for Developing Countries," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00118979, HAL.
  2. repec:hal:journl:halshs-00470647 is not listed on IDEAS
  3. repec:hal:journl:halshs-00118979 is not listed on IDEAS
  4. Nguyen, Ngoc Anh & Pham, Quang Ngoc & Nguyen, Dinh Chuc & Nguyen, Duc Nhat, 2007. "Innovation and Export of Vietnam’s SME Sector," MPRA Paper 3256, University Library of Munich, Germany.
  5. Cuong Le Van & Manh-Hung Nguyen & Thai Bao Luong & Tu Anh Nguyen, 2008. "New Technology, Human Capital and Growth for European Transitional Economies," THEMA Working Papers, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise 2008-07, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.

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