Distance to Frontier, Selection, and Economic Growth
We analyse an economy where managers engage both in the adoption of technologies from the world frontier and in innovation activities. The selection of high-skill managers is more important for innovation activities. As the economy approaches the technology frontier, selection becomes more important. As a result, countries at early stages of development pursue an investment-based strategy, with long-term relationships, high average size and age of firms, large average investments, but little selection. Closer to the world technology frontier, there is a switch to an innovation-based strategy with short-term relationships, younger firms, less investment and better selection of managers. We show that relatively backward economies may switch out of the investment-based strategy too soon, so certain economic institutions and policies, such as limits on product market competition or investment subsidies, which encourage the investment-based strategy may be beneficial. Societies that cannot switch out of the investment-based strategy, however, fail to converge to the world technology frontier. Non-convergence traps are more likely when policies and institutions are endogenized, enabling beneficiaries of existing policies to bribe politicians to maintain these policies.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
|Date of creation:||Jul 2002|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: 44 - 20 - 7183 8801
Fax: 44 - 20 - 7183 8820
|Order Information:|| Email: |
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Jian Tong & Chenggang Xu, 2004.
"Financial Institutions and The Wealth of Nations: Tales of Development,"
William Davidson Institute Working Papers Series
2004-672, William Davidson Institute at the University of Michigan.
- Tong, Jian & Xu, Chenggang, 2003. "Financial institutions and the wealth of nations: tales of development," Discussion Paper Series In Economics And Econometrics 0404, Economics Division, School of Social Sciences, University of Southampton.
- Jian Tong & Chenggang Xu, 2004. "Financial Institutions and The Wealth of Nations: Tales of Development," STICERD - Theoretical Economics Paper Series /2004/469, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
- Tong, Jian & Xu, Cheng-Gang, 2004. "Financial Institutions and the Wealth of Nations: Tales of Development," CEPR Discussion Papers 4348, C.E.P.R. Discussion Papers.
- Jian Tong & Xu Chenggang, 2004. "Financial institutions and the wealth of nations: tales of development," LSE Research Online Documents on Economics 3745, London School of Economics and Political Science, LSE Library.
- Daron Acemoglu & Fabrizio Zilibotti, 1994.
"Was Prometheus unbound by chance? Risk, diversification and growth,"
Economics Working Papers
98, Department of Economics and Business, Universitat Pompeu Fabra.
- Acemoglu, Daron & Zilibotti, Fabrizio, 1997. "Was Prometheus Unbound by Chance? Risk, Diversification, and Growth," Journal of Political Economy, University of Chicago Press, vol. 105(4), pages 709-51, August.
- Acemoglu, Daron & Zilibotti, Fabrizio, 1996. "Was Prometheus Unbound by Chance? Risk, Diversification and Growth," CEPR Discussion Papers 1426, C.E.P.R. Discussion Papers.
- Howitt, Peter & Mayer-Foulkes, David, 2005.
"R&D, Implementation, and Stagnation: A Schumpeterian Theory of Convergence Clubs,"
Journal of Money, Credit and Banking,
Blackwell Publishing, vol. 37(1), pages 147-77, February.
- Peter Howitt & David Mayer-Foulkes, 2002. "R&D, Implementation and Stagnation: A Schumpeterian Theory of Convergence Clubs," NBER Working Papers 9104, National Bureau of Economic Research, Inc.
- Daron Acemoglu & Simon Johnson & James A. Robinson, 2000.
"The Colonial Origins of Comparative Development: An Empirical Investigation,"
NBER Working Papers
7771, National Bureau of Economic Research, Inc.
- Daron Acemoglu & Simon Johnson & James A. Robinson, 2001. "The Colonial Origins of Comparative Development: An Empirical Investigation," American Economic Review, American Economic Association, vol. 91(5), pages 1369-1401, December.
- Joseph Zeira, 1998.
"Workers, Machines, And Economic Growth,"
The Quarterly Journal of Economics,
MIT Press, vol. 113(4), pages 1091-1117, November.
- Hassler, John & Rodríguez Mora, José Vicente, 1998.
"IQ, Social Mobility and Growth,"
CEPR Discussion Papers
1827, C.E.P.R. Discussion Papers.
- Hassler, John & Mora , José V. Rodríguez, 1998. "IQ, Social Mobility and Growth," Seminar Papers 635, Stockholm University, Institute for International Economic Studies.
- Hassler, J. & Rodriguez Mora, J.V., 1998. "IQ, Social Mobility and Growth," Papers 635, Stockholm - International Economic Studies.
- Brezis, Elise S & Krugman, Paul R & Tsiddon, Daniel, 1993. "Leapfrogging in International Competition: A Theory of Cycles in National Technological Leadership," American Economic Review, American Economic Association, vol. 83(5), pages 1211-19, December.
When requesting a correction, please mention this item's handle: RePEc:cpr:ceprdp:3467. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ()
If references are entirely missing, you can add them using this form.