Biased Technological Change and Poverty Traps
This paper presents a model in which technological change increases the share of reproducible factors at the expense of nonreproducible ones. When reproducible factors are abundant, firms have incentives to adopt technologies that are intensive in such resources, and this increases the incentives to invest more in them. This feedback process may generate growth or also stagnation: when reproducible factors are not abundant, firms do not have incentives to adopt technologies intensive in those resources and technological change does not take place. The paper also analyzes how biased technological change a.ects interpersonal distribution of income: nonreproducible factors are more equally distributed than reproducible ones, thus biased technological change increases inequality.
|Date of creation:||2003|
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