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Technology Adoption, Capital Maintenance And The Technological Gap

Author

Listed:
  • Raouf Boucekkine

    () (IRES)

  • Blanca Martínez

    (Universidad de Alicante)

  • CARGI SAGLAM

    (IRES)

Abstract

We study optimal growth models à la Nelson and Phelps (1966) where labor resources can be allocated either to production, technology adoption or capital maintenance. We first characterize the balanced growth paths of a benchmark model without maintenance. Then we introduce the maintenance activity via the depreciation rate of capital. We characterize the optimal allocation of labor across the three activities. Though maintenance deepens the technological gap by diverting labor resources from adoption, we show that it generally increases the long run output level. Moreover we find that equilibrium maintenance and adoption efforts respond in opposite directions to policy or technology shocks. When a technological shock occurs, the reduction of the equilibrium technological gap is incompatible with welfare maximization. Finally, we find that the long term output response to policy shocks is slightly higher in the presence of maintenance.

Suggested Citation

  • Raouf Boucekkine & Blanca Martínez & CARGI SAGLAM, 2003. "Technology Adoption, Capital Maintenance And The Technological Gap," Working Papers. Serie AD 2003-18, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
  • Handle: RePEc:ivi:wpasad:2003-18
    as

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    References listed on IDEAS

    as
    1. Tiffen, Mary & Mortimore, Michael, 1994. "Malthus controverted: The role of capital and technology in growth and environment recovery in Kenya," World Development, Elsevier, vol. 22(7), pages 997-1010, July.
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    4. Feldstein, Martin S & Rothschild, Michael, 1974. "Towards an Economic Theory of Replacement Investment," Econometrica, Econometric Society, vol. 42(3), pages 393-423, May.
    5. Blomstrom, Magnus & Kokko, Ari, 1998. " Multinational Corporations and Spillovers," Journal of Economic Surveys, Wiley Blackwell, vol. 12(3), pages 247-277, July.
    6. Vishwasrao, Sharmila & Bosshardt, William, 2001. "Foreign ownership and technology adoption: evidence from Indian firms," Journal of Development Economics, Elsevier, vol. 65(2), pages 367-387, August.
    7. Nickell, Stephen, 1975. "A closer look at replacement investment," Journal of Economic Theory, Elsevier, vol. 10(1), pages 54-88, February.
    8. Kokko, Ari, 1994. "Technology, market characteristics, and spillovers," Journal of Development Economics, Elsevier, vol. 43(2), pages 279-293, April.
    9. Parente, Stephen L & Prescott, Edward C, 1994. "Barriers to Technology Adoption and Development," Journal of Political Economy, University of Chicago Press, vol. 102(2), pages 298-321, April.
    10. Teoman Pamukçu & Michele Cincera, 2001. "Analyse des déterminants de l'innovation technologique dans un Nouveau Pays Industrialisé : une étude économétrique sur données d'entreprises dans le secteur manufacturier turc," Économie et Prévision, Programme National Persée, vol. 150(4), pages 139-158.
    11. repec:adr:anecst:y:2000:i:58:p:05 is not listed on IDEAS
    12. Collard, Fabrice & Kollintzas, Tryphon, 2000. "Maintenance, Utilization, and Depreciation along the Business Cycle," CEPR Discussion Papers 2477, C.E.P.R. Discussion Papers.
    13. 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.
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    Citations

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    Cited by:

    1. Raouf, BOUCEKKINE & Blanca, MARTINEZ & Cagri, SAGLAM, 2006. "Capital Maintenance Vs Technology Adopton under Embodied Technical Progress," Discussion Papers (ECON - Département des Sciences Economiques) 2006030, Université catholique de Louvain, Département des Sciences Economiques.
    2. Blanca MARTINEZ, 2002. "Technological convergence and the connections between adoption, maintenance and investment activities," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 2002025, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    3. 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.

    More about this item

    Keywords

    Adoption; Maintenance; Technological gap; Output gap;

    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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