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Quality of Knowledge Technology, Returns to Production Technology and Economic Development

Author

Listed:
  • Cuong Le Van

    (CERMSEM - CEntre de Recherche en Mathématiques, Statistique et Économie Mathématique - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique)

  • H. Cagri Saglam

    (UCL IRES - Institut de recherches économiques et sociales - UCL - Université Catholique de Louvain = Catholic University of Louvain)

Abstract

We incorporate a production technology that exhibits increasing returns to scale for small values of the capital stock and diminishing returns for the higher stocks at the firm level in a discrete-time version of Romer's endogenous growth model. We study the social planner's problem where the social production technology exhibits globally increasing returns to scale. The properties of the optimal paths are charaxterized. It is proved that for a given quality of knowledge technology, the countries can take off if their initial stock of capital is above a critical value. We nalyze the effect of three factors on the critical value: initial knowledge, quality of knowledge technology, and level of fixed costs associated with production.

Suggested Citation

  • Cuong Le Van & H. Cagri Saglam, 2004. "Quality of Knowledge Technology, Returns to Production Technology and Economic Development," Post-Print halshs-00118994, HAL.
    • Handle: RePEc:hal:journl:halshs-00118994
    DOI: 10.1017/S1365100503030086
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    Cited by:

    1. Olivier Bruno & Cuong Van & Benoît Masquin, 2009. "When does a developing country use new technologies?," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 40(2), pages 275-300, August.
    2. Nguyen, Ngoc Anh & Pham, Quang Ngoc & Nguyen, Dinh Chuc & Nguyen, Duc Nhat, 2007. "Innovation and Export of Vietnam’s SME Sector," MPRA Paper 3256, University Library of Munich, Germany.
    3. Jean-Michel Grandmont, 2013. "Tribute to Cuong Le Van," International Journal of Economic Theory, The International Society for Economic Theory, vol. 9(1), pages 5-10, March.
    4. Cuong Le Van & Tu Anh Nguyen & Tran Dinh Tuan, 2013. "Saving Rate, Total Factor Productivity and Growth Process for Developing Countries," Working Papers 155, Development and Policies Research Center (DEPOCEN), Vietnam.
    5. Crettez, Bertrand & Hayek, Naila & Morhaim, Lisa, 2017. "Optimal growth with investment enhancing labor," Mathematical Social Sciences, Elsevier, vol. 86(C), pages 23-36.

    More about this item

    Keywords

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    JEL classification:

    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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