IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this article or follow this journal

Technological Diversification

  • Miklós Koren
  • Silvana Tenreyro

Economies at early stages of development are frequently shaken by large changes in growth rates, whereas advanced economies tend to experience relatively stable growth rates. To explain this pattern, we propose a model of technological diversification. Production makes use of input-varieties that are subject to imperfectly correlated shocks. Endogenous variety adoption by firms raises average productivity and provides diversification benefits against variety-specific shocks. Firm-level and aggregate volatility thus decline as a by-product of the development process. We quantitatively assess the model's predictions and find that it can generate patterns of volatility and development consistent with the data. (JEL D21, D24, E23, O33, O47)

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://www.aeaweb.org/articles.php?doi=10.1257/aer.103.1.378
Download Restriction: no

File URL: http://www.aeaweb.org/aer/data/feb2013/20091279_data.zip
Download Restriction: no

File URL: http://www.aeaweb.org/aer/data/feb2013/20091279_app.pdf
Download Restriction: Access to full text is restricted to AEA members and institutional subscribers.

Article provided by American Economic Association in its journal American Economic Review.

Volume (Year): 103 (2013)
Issue (Month): 1 (February)
Pages: 378-414

as
in new window

Handle: RePEc:aea:aecrev:v:103:y:2013:i:1:p:378-414
Note: DOI: 10.1257/aer.103.1.378
Contact details of provider: Web page: https://www.aeaweb.org/aer/Email:


More information through EDIRC

Order Information: Web: https://www.aeaweb.org/subscribe.html

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.:

as in new window
  1. Henry Overman & Patricia Rice & Anthony Venables, 2010. "Economic Linkages across Space," Regional Studies, Taylor & Francis Journals, vol. 44(1), pages 17-33.
  2. Edward L. Glaeser & Rafael La Porta & Florencio Lopez-de-Silane & Andrei Shleifer, 2004. "Do Institutions Cause Growth?," NBER Working Papers 10568, National Bureau of Economic Research, Inc.
  3. Caselli, Francesco & Wilson, Daniel J., 2004. "Importing technology," Journal of Monetary Economics, Elsevier, vol. 51(1), pages 1-32, January.
  4. Kraay, Aart & Ventura, Jaume, 2001. "Comparative Advantage and the Cross-Section of Business Cycles," CEPR Discussion Papers 3000, C.E.P.R. Discussion Papers.
  5. Juan Botero & Simeon Djankov & Rafael LaPorta & Florencio López-de-Silanes & Andrei Shleifer, . "The Regulation of Labor," Working Paper 19483, Harvard University OpenScholar.
  6. Greenwood, J. & Jovanovic, B., 1990. "Financial Development, Growth, And The Distribution Of Income," University of Western Ontario, The Centre for the Study of International Economic Relations Working Papers 9002, University of Western Ontario, The Centre for the Study of International Economic Relations.
  7. Acemoglu, Daron & Johnson, Simon & Robinson, James A & Thaicharoen, Yunyong, 2002. "Institutional Causes, Macroeconomic Symptoms: Volatility, Crises and Growth," CEPR Discussion Papers 3575, C.E.P.R. Discussion Papers.
  8. Koren, Miklós & Tenreyro, Silvana, 2005. "Volatility and Development," CEPR Discussion Papers 5307, C.E.P.R. Discussion Papers.
  9. Paola Giuri & John Hagedoorn & Myriam Mariani, 2002. "Technological Diversification and Strategic Alliances," LEM Papers Series 2002/04, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
  10. Levine, Ross, 1992. "Financial structures and economic development," Policy Research Working Paper Series 849, The World Bank.
  11. Caselli, Francesco & Feyrer, James, 2005. "The Marginal Product of Capital," CEPR Discussion Papers 5203, C.E.P.R. Discussion Papers.
  12. Andrew B. Bernard & J. Bradford Jensen & Stephen J. Redding & Peter K. Schott, 2007. "Firms in International Trade," Journal of Economic Perspectives, American Economic Association, vol. 21(3), pages 105-130, Summer.
  13. Diego Comin & Thomas Philippon, 2005. "The Rise in Firm-Level Volatility: Causes and Consequences," NBER Working Papers 11388, National Bureau of Economic Research, Inc.
  14. Paul Romer, 1989. "Endogenous Technological Change," NBER Working Papers 3210, National Bureau of Economic Research, Inc.
  15. Klette, Tor Jakob & Kortum, Samuel, 2002. "Innovating Firms and Aggregate Innovation," Memorandum 02/2002, Oslo University, Department of Economics.
  16. Alejandro Cunat & Marc J. Melitz, 2007. "Volatility, labor market flexibility, and the pattern of comparative advantage," LSE Research Online Documents on Economics 19714, London School of Economics and Political Science, LSE Library.
  17. Saint-Paul, G., 1990. "Technological Choice, Financial Markets and Economic Development," DELTA Working Papers 90-30, DELTA (Ecole normale supérieure).
  18. Granstrand, Ove & Sjolander, Soren, 1990. "Managing innovation in multi-technology corporations," Research Policy, Elsevier, vol. 19(1), pages 35-60, February.
  19. Daron Acemoglu & Fabrizio Zilibotti, 1994. "Was Prometheus unbound by chance? Risk, diversification and growth," Economics Working Papers 98, Department of Economics and Business, Universitat Pompeu Fabra.
  20. Comin, D. & Hobijn, B., 2003. "Cross-Country Technology Adoption: Making the Theories Face the Facts," Working Papers 03-04, C.V. Starr Center for Applied Economics, New York University.
  21. Beltramo, Mark A., 1989. "Modelling fuel-switching between natural gas and fuel oil in US manufacturing," Energy Economics, Elsevier, vol. 11(1), pages 70-78, January.
  22. Francesco Caselli & Wilbur John Coleman II, 2001. "Cross-Country Technology Diffusion: The Case of Computers," NBER Working Papers 8130, National Bureau of Economic Research, Inc.
  23. Jens Fr¯slev Christensen, 2002. "Corporate strategy and the management of innovation and technology," Industrial and Corporate Change, Oxford University Press, vol. 11(2), pages 263-288.
  24. Gambardella, Alfonso & Torrisi, Salvatore, 1998. "Does technological convergence imply convergence in markets? Evidence from the electronics industry," Research Policy, Elsevier, vol. 27(5), pages 445-463, September.
  25. Ramey, Garey & Ramey, Valerie A, 1995. "Cross-Country Evidence on the Link between Volatility and Growth," American Economic Review, American Economic Association, vol. 85(5), pages 1138-51, December.
  26. Neil Rankin & M�ns Söderbom & Francis Teal, 2006. "Exporting from Manufacturing Firms in Sub-Saharan Africa," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 15(4), pages 671-687, December.
  27. Stephen Hymer & Peter Pashigian, 1962. "Firm Size and Rate of Growth," Journal of Political Economy, University of Chicago Press, vol. 70, pages 556.
  28. Jordi Gali & Mark J. Gertler, 2007. "Introduction to "International Dimensions of Monetary Policy"," NBER Chapters, in: International Dimensions of Monetary Policy, pages 1-10 National Bureau of Economic Research, Inc.
  29. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
  30. Bernanke, Ben & Gertler, Mark, 1990. "Financial Fragility and Economic Performance," The Quarterly Journal of Economics, MIT Press, vol. 105(1), pages 87-114, February.
  31. Mas-Colell, Andreu & Whinston, Michael D. & Green, Jerry R., 1995. "Microeconomic Theory," OUP Catalogue, Oxford University Press, number 9780195102680, March.
Full references (including those not matched with items on IDEAS)

This item is featured on the following reading lists or Wikipedia pages:

  1. Technological Diversification (AER 2013) in ReplicationWiki

When requesting a correction, please mention this item's handle: RePEc:aea:aecrev:v:103:y:2013:i:1:p:378-414. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Jane Voros)

or (Michael P. Albert)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.