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Technology Adoption, Capital Maintenance and the Technological Gap

Author

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  • Raouf BOUCEKKINE

    (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES))

  • Blanca MARTINEZ

    (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES))

  • Cagri SAGLAM

    (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES))

Abstract

In this paper, we study the properties of optimal growth models à la Nelson and Phelps (1966) where the labor resources of an economy can be allocated freely either to production, technology adoption or capital maintenance. We first characterize the balanced growth paths of a benchmark model without maintenance services. Then we introduce te maintenance activity via the depreciation rate of capital. We characterize the optimal allocation of labor across the three activities. We prove that when technolgical shocks occur, equilibrium maintenance and adoption operate in opposite directions. The main prediction of the model is that though capital maintenance deepens the technological gap by diverting labor resources from adoption, it generally increases the long run output level at equilibrium

Suggested Citation

  • Raouf BOUCEKKINE & Blanca MARTINEZ & Cagri SAGLAM, 2001. "Technology Adoption, Capital Maintenance and the Technological Gap," LIDAM Discussion Papers IRES 2001033, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    • Handle: RePEc:ctl:louvir:2001033
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    Cited by:

    1. Raouf Boucekkine & Blanca Martínez & Cagri Saglam, 2006. "The Development Problem under Embodiment," Review of Development Economics, Wiley Blackwell, vol. 10(1), pages 42-58, February.
    2. BOUCEKKINE, Raouf & MARTINEZ, Blanca & SAGLAM, Cagri, 2006. "Capital maintenance Vs technology adoption under embodied technical progress," LIDAM Discussion Papers CORE 2006058, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    3. Blanca MARTINEZ, 2002. "Technological convergence and the connections between adoption, maintenance and investment activities," LIDAM Discussion Papers IRES 2002025, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).

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    More about this item

    Keywords

    Technology adoption; Capital maintenance; Technological gap; Long run output level;
    All these keywords.

    JEL classification:

    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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