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Financial Development and Technology Diffusion

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  • Comin, Diego
  • Nanda, Ramana

Abstract

We examine the extent to which financial market development impacts the diffusion of 16 major technologies, looking across 55 countries, from 1870 to 2000. We find that greater depth in financial markets leads to faster technology diffusion for more capital-intensive technologies, but only in periods closer to the invention of the technology. In fact, we find no differential effect of financial depth on the diffusion of capital-intensive technologies in the late stages of diffusion or in late adopters. Our results are consistent with a view that local financial markets play a critical role in facilitating the process of experimentation that is required for the initial commercialization of technologies. This evidence also points to an important mechanism relating financial market development to technology diffusion and economic growth.

Suggested Citation

  • Comin, Diego & Nanda, Ramana, 2014. "Financial Development and Technology Diffusion," CEPR Discussion Papers 10251, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:10251
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    Cited by:

    1. Ramana Nanda & William R. Kerr, 2015. "Financing Innovation," Annual Review of Financial Economics, Annual Reviews, vol. 7(1), pages 445-462, December.
    2. Philippe Aghion & Diego Comin & Peter Howitt & Isabel Tecu, 2016. "When Does Domestic Savings Matter for Economic Growth?," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 64(3), pages 381-407, August.
    3. repec:kap:sbusec:v:50:y:2018:i:3:d:10.1007_s11187-017-9906-2 is not listed on IDEAS
    4. Alessandro Saia & Dan Andrews & Silvia Albrizio, 2015. "Productivity Spillovers from the Global Frontier and Public Policy: Industry-Level Evidence," OECD Economics Department Working Papers 1238, OECD Publishing.
    5. repec:bof:bofrdp:urn:nbn:fi:bof-201512141480 is not listed on IDEAS

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    Keywords

    banking; experimentation; growth; technology diffusion;

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