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Socially optimal North--South capital transfer and technology diffusion

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  • Michael Hübler
  • Thomas S. Lontzek

Abstract

We study North--South capital transfer and the diffusion of embodied technologies within a framework of intertemporal global welfare maximization. We show saddle path stability and characterize the steady state. We then examine the transition path by running numerical experiments based on realistic data. As a result, technology diffusion will succeed if the absorptive capacity is sufficient which requires sufficient investment. While a large share of capital is allocated to the South in early periods, this share declines in later periods when the South has caught up in terms of technologies.

Suggested Citation

  • Michael Hübler & Thomas S. Lontzek, 2012. "Socially optimal North--South capital transfer and technology diffusion," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 21(6), pages 921-940, December.
    • Handle: RePEc:taf:jitecd:v:21:y:2012:i:6:p:921-940
    DOI: 10.1080/09638199.2010.546869
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    References listed on IDEAS

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    1. World Bank, 2006. "Global Development Finance 2006 : The Development Potential of Surging Capital Flows, Volume 1. Review, Analysis, and Outlook," World Bank Publications - Books, The World Bank Group, number 8125, April.
    2. World Bank, 2008. "Global Economic Prospects 2008 : Technology Diffusion in the Developing World," World Bank Publications - Books, The World Bank Group, number 6335, April.
    3. World Bank, 2010. "World Development Report 2010," World Bank Publications - Books, The World Bank Group, number 4387, April.
    4. Valerio Crispolti & Daniela Marconi, 2005. "Technology transfer and economic growth in developing countries: an econometric analysis," Temi di discussione (Economic working papers) 564, Bank of Italy, Economic Research and International Relations Area.
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    1. Michael Hübler, 2015. "A theory-based discussion of international technology funding," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 17(2), pages 313-327, April.

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