Quality of knowledge technology, returns to production technology, and economic development
Presenting a discrete time version of the Romer (1986) model, this paper analyzes optimal paths in a one-sector growth model when the technology is not convex. We prove that for a given quality of knowledge technology, the countries could take-off if their initial stock of capital are above a critical level; otherwise they could face a poverty-trap. We show that for an economy which wants to take-off by means of knowledge technology requires three factors : large amount of initial knowledge, small fixed costs and a good quality of knowledge technology.
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|Note:||In : Macroeconomic Dynamics, 8, 147-161, 2004|
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- Romer, Paul M, 1986.
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- Lisa Morhaim & Charles-Henri Dimaria & Cuong Le Van, 2002.
"The discrete time version of the Romer model,"
Springer, vol. 20(1), pages 133-158.
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