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Socially optimal North--South capital transfer and technology diffusion


  • Michael Hübler
  • Thomas S. Lontzek


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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    Cited by:

    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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