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The Development problem under embodiment

Author

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  • Raouf, BOUCEKKINE

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

  • Blanca, MARTINEZ

    (Universidad de Alicante)

  • Cagri, SAGLAM

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

Abstract

We study technology adoption in an optimal growth model with embodied technical change. The economy consists of the final good sector, the capital sector, and the technology sector whose role is the imitation of exogenous innovations. Labor resources are scarce. They are freely allocated to the technology and final good sectors. The final good is freely allocated to consumption and to the capital sector. We analytically characterize the optimal allocation decisions in the long run. Using a calibrated version of the model, we find that an acceleration in the rate of embodied technical change should not be responded by an immediate and strong adoption effort. Instead, adoption labor should decrease in the short run, and the optimal technological gap is shown to increase either in the short or in the long run. The state of the institutions and policies around the technology sector is key in the design of the optimal adoption timing.

Suggested Citation

  • Raouf, BOUCEKKINE & Blanca, MARTINEZ & Cagri, SAGLAM, 2003. "The Development problem under embodiment," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 2003006, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    • Handle: RePEc:ctl:louvir:2003006
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    References listed on IDEAS

    as
    1. Raouf Boucekkine & Fernando del Río & Omar Licandro, 2003. "Embodied Technological Change, Learning-by-doing and the Productivity Slowdown," Scandinavian Journal of Economics, Wiley Blackwell, vol. 105(1), pages 87-98, March.
    2. Raouf BOUCEKKINE & Blanca MARTINEZ & Cagri SAGLAM, 2001. "Technology Adoption, Capital Maintenance and the Technological Gap," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 2001033, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    3. Krusell, Per, 1998. "Investment-Specific R&D and the Decline in the Relative Price of Capital," Journal of Economic Growth, Springer, vol. 3(2), pages 131-141, June.
    4. Boucekkine, Raouf & del Rio, Fernando & Licandro, Omar, 2005. "Obsolescence and modernization in the growth process," Journal of Development Economics, Elsevier, vol. 77(1), pages 153-171, June.
    5. Robert J. Gordon, 2000. "Does the "New Economy" Measure Up to the Great Inventions of the Past?," Journal of Economic Perspectives, American Economic Association, vol. 14(4), pages 49-74, Fall.
    6. Greenwood, Jeremy & Hercowitz, Zvi & Krusell, Per, 1997. "Long-Run Implications of Investment-Specific Technological Change," American Economic Review, American Economic Association, vol. 87(3), pages 342-362, June.
    7. Niosi, Jorge & Hanel, Petr & Fiset, Liette, 1995. "Technology transfer to developing countries through engineering firms: The Canadian experience," World Development, Elsevier, vol. 23(10), pages 1815-1824, October.
    8. Grether, Jean-Marie, 1999. "Determinants of Technological Diffusion in Mexican Manufacturing: A Plant-Level Analysis," World Development, Elsevier, vol. 27(7), pages 1287-1298, July.
    9. Jeremy Greenwood & Boyan Jovanovic, 2001. "Accounting for Growth," NBER Chapters,in: New Developments in Productivity Analysis, pages 179-224 National Bureau of Economic Research, Inc.
    10. Richard R. Nelson & Edmond S. Phelps, 1965. "Investment in Humans, Technological Diffusion and Economic Growth," Cowles Foundation Discussion Papers 189, Cowles Foundation for Research in Economics, Yale University.
    11. Boyan Jovanovic, 1995. "Learning and Growth," NBER Working Papers 5383, National Bureau of Economic Research, Inc.
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    Citations

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    Cited by:

    1. Raouf Boucekkine & Benteng Zou, 2010. "Catching-up with the “locomotive”: a simple theory," CREA Discussion Paper Series 10-02, Center for Research in Economic Analysis, University of Luxembourg.
    2. Raúl Fuentes Z. & Javier Scavia D. & Juan Berríos P., 2014. "About the long-term distributional impact of embodied technological progress (without spillover effects) in developing countries," Journal Economía Chilena (The Chilean Economy), Central Bank of Chile, vol. 17(3), pages 28-54, December.
    3. Boucekkine, Raouf & Zou, Benteng, 2011. "Catching-up with the "locomotive"," Center for Mathematical Economics Working Papers 428, Center for Mathematical Economics, Bielefeld University.
    4. Dawid, Herbert & Greiner, Alfred & Zou, Benteng, 2010. "Optimal foreign investment dynamics in the presence of technological spillovers," Journal of Economic Dynamics and Control, Elsevier, vol. 34(3), pages 296-313, March.
    5. Latzer, Hélène, 2013. "Bridging the technology gap with limited human capital resources," Economic Modelling, Elsevier, vol. 35(C), pages 175-184.
    6. Dhaoui, Elwardi, 2012. "Cognitive Capitalism: Foundations, Assessment and Evaluation of New Perspectives," MPRA Paper 63688, University Library of Munich, Germany.
    7. Herbert Dawid & Benteng Zou, 2017. "Foreign Direct Investment with Endogenous Technology Choice," Pacific Economic Review, Wiley Blackwell, vol. 22(1), pages 3-22, February.
    8. Crettez, Bertrand & Hayek, Naila & Morhaim, Lisa, 2017. "Optimal growth with investment enhancing labor," Mathematical Social Sciences, Elsevier, vol. 86(C), pages 23-36.
    9. repec:ebl:ecbull:v:18:y:2004:i:2:p:1-11 is not listed on IDEAS
    10. Benteng Zou & Carmen Camacho, 2004. "The spatial Solow model," Economics Bulletin, AccessEcon, vol. 18(2), pages 1-11.
    11. Fuentes, Raúl & Mishra, Tapas & Scavia, Javier & Parhi, Mamata, 2014. "On optimal long-term relationship between TFP, institutions, and income inequality under embodied technical progress," Structural Change and Economic Dynamics, Elsevier, vol. 31(C), pages 89-100.
    12. Helene, LATZER, 2006. "Foreign Direct Investment and the Nature of the Imitation Process," Discussion Papers (ECON - Département des Sciences Economiques) 2006012, Université catholique de Louvain, Département des Sciences Economiques.

    More about this item

    Keywords

    Embodiment; Technology adoption; Technological gap; Transition dynamics;

    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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