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Technological Change and the Wealth of Nations

  • Gino Gancia
  • Fabrizio Zilibotti


    (CREI and Universitat Pompeu Fabra, 08005 Barcelona, Spain
    Institute for Empirical Research in Economics, University of Zurich, CH-8006 Z├╝rich, Switzerland)

We discuss a unified theory of directed technological change and technology adoption that can shed light on the causes of persistent productivity differences across countries. In our model, new technologies are designed in advanced countries and diffuse endogenously to less developed countries. Our framework is rich enough to highlight three broad reasons for productivity differences: inappropriate technologies, policy-induced barriers to technology adoption, and within-country misallocations across sectors due to policy distortions. We also discuss the effects of two aspects of globalization, trade in goods and migration, on the wealth of nations through their impact on the direction of technical progress. By doing so, we illustrate some of the equalizing and unequalizing forces of globalization.

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Article provided by Annual Reviews in its journal Annual Review of Economics.

Volume (Year): 1 (2009)
Issue (Month): 1 (05)
Pages: 93-120

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Handle: RePEc:anr:reveco:v:1:y:2009:p:93-120
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