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Author Info
Ana Fernandes (CEMFI)
Krishna B. Kumar (University of Southern California)

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Abstract

In this paper, we investigate incentives other than altruism that developed countries have in improving technologies specific to developing countries. We propose a simple model of international trade between two regions, in which all individuals have similar preferences over an inferior good and a luxury good. The poor region has a comparative advantage in the production of the inferior good, and the rich in the luxury good. Even when costly adaptation of the technology to the poor region's characteristics is required -- which makes the technology inappropriate for local use -- we show that there are parameter configurations for which the rich region has an incentive to incur this cost. By raising the efficiency of the productive process of the developing region, the developed region can redirect its own productive resources toward the luxury good; it can also gain access to a more diversified set of consumption choices. Indeed, there are cases where the rich region would prefer to improve the poor region's technology for producing the inferior good rather than its own. Such technology transfers can increase the welfare of both regions. We apply our model to the Green Revolution and provide a quantitative assessment of its welfare effects.

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Paper provided by EconWPA in its series Development and Comp Systems with number 0304003.

Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Length: 43 pages
Date of creation: 04 Apr 2003
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Handle: RePEc:wpa:wuwpdc:0304003

Note: Type of Document - Acrobat PDF; prepared on IBM PC ; to print on HP PostScript; pages: 43; figures: included
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Web page: http://129.3.20.41

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Related research
Keywords: Technology improvements; Dynamic trade models; Welfare analysis;

Find related papers by JEL classification:
O33 - Economic Development, Technological Change, and Growth - - Technological Change - - - Technological Change: Choices and Consequences; Diffusion Processes
F11 - International Economics - - Trade - - - Neoclassical Models of Trade
F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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  1. Technology Assessment
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Robert E. Hall & Charles I. Jones, 1999. "Why Do Some Countries Produce So Much More Output per Worker than Others?," NBER Working Papers 6564, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  2. Morisset, Jacques, 1998. "Unfair Trade? The Increasing Gap between World and Domestic Prices in Commodity Markets during the Past 25 Years," World Bank Economic Review, Oxford University Press, vol. 12(3), pages 503-26, September.
  3. Daron Acemoglu & Fabrizio Zilibotti, 2001. "Productivity Differences," The Quarterly Journal of Economics, MIT Press, vol. 116(2), pages 563-606, May. [Downloadable!] (restricted)
    Other versions:
  4. Satyajit Chatterjee & B. Ravikumar & B. Ravikumar, 1997. "Minimum consumptions requirements: theoretical and quantitative implications for growth and distribution," Working Papers 97-15, Federal Reserve Bank of Philadelphia. [Downloadable!]
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  5. Kiminori Matsuyama, 1999. "A Ricardian Model with a Continuum of Goods under Non-homothetic Preferences: Demand Complementarities, Income Distribution, and North-South Trade," Discussion Papers 1241, Northwestern University, Center for Mathematical Studies in Economics and Management Science. [Downloadable!]
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  6. John Luke Gallup & Jeffrey D. Sachs, 2000. "The Economic Burden of Malaria," CID Working Papers 52, Center for International Development at Harvard University. [Downloadable!]
  7. Romer, Paul M, 1990. "Endogenous Technological Change," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages S71-102, October. [Downloadable!] (restricted)
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  8. Rivera-Batiz, Luis A & Romer, Paul M, 1991. "Economic Integration and Endogenous Growth," The Quarterly Journal of Economics, MIT Press, vol. 106(2), pages 531-55, May. [Downloadable!] (restricted)
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