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The Optimal Structure of Technology Adoption and Creation: Basic Research vs. Development in the Presence of Distance to Frontier

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Author Info

  • Ha, Joonkyung

    (Hanyang University)

  • Jin Kim, Yong

    (Ajou University)

  • Lee, Jong-Wha

    (Asian Development Bank)

Abstract

This paper presents a theoretical model and empirical evidence to explain the observation that a country in which the level of technology approaches the technology frontier tends to rely more on technology creation than adoption, and to invest more in basic research than in development. The model shows that technology creation involves both basic and development research processes while technology adoption uses only the latter process. Thus, research and development (R&D) investment in our model involves three different processes: basic research in technology creation, development in technology creation, and development in technology adoption. The results suggest first, that the rate of growth is positively correlated with the level of basic research activities in the technology creation sector, if one country’s technology gap with the technology frontier is small enough. Second, an increase in the efficiency of the education system for highly skilled workers raises the level of basic research and the rate of growth. Third, verifying these theoretical results, empirical analyses using panel data of Japan; Republic of Korea; and Taipei,China show that the narrower the technological distance to the frontier, the higher the growth effect of basic R&D, indicating that the share of basic R&D matters for economic growth. Last, these also show that the quality of tertiary education has a significantly positive effect on the productivity of R&D.

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Bibliographic Info

Paper provided by Asian Development Bank in its series ADB Economics Working Paper Series with number 163.

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Length: 29 pages
Date of creation: Jun 2009
Date of revision:
Handle: RePEc:ris:adbewp:0163

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Related research

Keywords: Basic research; technology creation; technology adoption; economic growth;

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References

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  1. David N. Weil, 1996. "Appropriate Technology and Growth," Working Papers 96-24, Brown University, Department of Economics.
  2. Yong Jin Kim & Jong‐Wha Lee, 2011. "Technological Change, Human Capital Structure, And Multiple Growth Paths," The Japanese Economic Review, Japanese Economic Association, vol. 62(3), pages 305-330, 09.
  3. Hartog,Joop & Maassen van den Brink,Henriëtte (ed.), 2009. "Human Capital," Cambridge Books, Cambridge University Press, number 9780521117562, October.
  4. Douglas Gollin, 2002. "Getting Income Shares Right," Journal of Political Economy, University of Chicago Press, vol. 110(2), pages 458-474, April.
  5. Acemoglu, D., 1997. "Why Do New Technologies Complement Skills? Directed Technical Change and Wage Inequality," Working papers 97-14, Massachusetts Institute of Technology (MIT), Department of Economics.
  6. Ben S. Bernanke & Refet S. Gurkaynak, 2001. "Is Growth Exogenous? Taking Mankiw, Romer and Weil Seriously," NBER Working Papers 8365, National Bureau of Economic Research, Inc.
  7. Aghion, Philippe & Howitt, Peter, 1996. " Research and Development in the Growth Process," Journal of Economic Growth, Springer, vol. 1(1), pages 49-73, March.
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Cited by:
  1. James B. Ang & Jakob B. Madsen, 2010. "Can Second-Generation Endogenous Growth Models Explain The Productivity Trends And Knowledge Production In The Asian Miracle Economies?," CAMA Working Papers 2010-05, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.

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