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Equipment Investment and Growth In Developing Countries

  • Hendricks, Lutz A.

Abstract Currently Unavailable. Differences in equipment investment or equipment prices account for large variations in growth rates across countries. An important task is to understand the economic mechanism underlying the equipment-growth nexus and its policy implications. In order to study this issue, this paper develops a model in which growth is driven by the adoption of technologies that are embodied in equipment. I show that this model can quantitatively account for the observed cross-country relationships between equipment investment, equipment prices, and growth. I find that the competitive equilibrium is characterized by inefficiently low levels of learning and too slow growth and study which policies are able to remedy this inefficiency.

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Paper provided by Iowa State University, Department of Economics in its series Staff General Research Papers Archive with number 11932.

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Date of creation: 01 Jan 2000
Date of revision:
Publication status: Published in Journal of Development Economics 2000, vol. 61, pp. 335-364
Handle: RePEc:isu:genres:11932
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Iowa State University, Dept. of Economics, 260 Heady Hall, Ames, IA 50011-1070

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  13. Feldstein, Martin S & Foot, David K, 1971. "The Other Half of Gross Investment: Replacement and Modernization Expenditures," The Review of Economics and Statistics, MIT Press, vol. 53(1), pages 49-58, February.
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