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When Does a Developing Country Use New Technologies?

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  • Olivier Bruno

    (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - Université Nice Sophia Antipolis (UNS) - CNRS : UMR6227)

  • Cuong Le Van

    ()
    (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Paris I - Panthéon-Sorbonne, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris)

  • Benoît Masquin

    (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - Université Nice Sophia Antipolis (UNS) - CNRS : UMR6227)

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 toproduce new technologies.

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Bibliographic Info

Paper provided by HAL in its series Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) with number halshs-00101361.

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Date of creation: Aug 2009
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Publication status: Published, Economic Theory, 2009, 40, 2, 275-300
Handle: RePEc:hal:cesptp:halshs-00101361

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Keywords: economic development; technical progress; skilled labor; non skilled labor; total factor productivity ; new technology; developing countries;

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Cited by:
  1. Cuong Le Van & Manh-Hung Nguyen & Laurent Thai Bao Luong, 2006. "New technology, human capital and growth for developing countries," Cahiers de la Maison des Sciences Economiques, Université Panthéon-Sorbonne (Paris 1) b06065, Université Panthéon-Sorbonne (Paris 1).
  2. repec:hal:journl:halshs-00118979 is not listed on IDEAS
  3. 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.
  4. repec:hal:journl:halshs-00470647 is not listed on IDEAS
  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 2008-07, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.

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