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Technology Adoption in Follower Countries: With or Without Local R&D Activities?

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  • TODO Yasuyuki

Abstract

This paper develops an endogenous growth model incorporating quality improvement, focusing on a follower country that lags behind the world technology frontier and adopts new technology with adaptation to local circumstances. We assume two forms of adaptation: inventive adaptation, which requires formal local R&D activities, and minor adaptation without R&D. Although current R&D activities expand local knowledge for future R&D, minor adaptation without R&D does not. The main result in the paper is that countries with sufficient local knowledge and skilled labor initially depend on technology adoption without R&D but then depend on local R&D, while other countries continue to depend on adoption without R&D. Switching regression using cross-country data supports the presence of multiple steady-state equilibria.

Suggested Citation

  • TODO Yasuyuki, 2004. "Technology Adoption in Follower Countries: With or Without Local R&D Activities?," ESRI Discussion paper series 104, Economic and Social Research Institute (ESRI).
  • Handle: RePEc:esj:esridp:104
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