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Avoiding the Trap: The Dynamic Interaction of North-South Capital Mobility and Technology Diffusion

  • Michael Hübler

This paper analyzes a stylized model of international capital mobility and diffusion of embodied technologies from North to South. The South can fall behind in terms of technologies or get trapped in a situation, in which it is unable to attract foreign capital and embodied technologies, if its absorptive capacity is too low. The paper reconciles the view that technological catching up is stronger, the larger the technology gap, with the alternative view that technological catching up is strongest at a medium technology gap. The closer the South is to the technology frontier, the more beneficial is a higher income share of foreign capital. The speed of technology diffusion is higher in small economic regions with high population densities

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Paper provided by Kiel Institute for the World Economy in its series Kiel Working Papers with number 1477.

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Length: 30 pages
Date of creation: Jan 2009
Date of revision:
Handle: RePEc:kie:kieliw:1477
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  17. van Meijl, Hans & Frank van Tongeren, 1999. "Endogenous International Technology Spillovers and Biased Technical Change in the GTAP Model," GTAP Technical Papers 318, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University.
  18. Girma, Sourafel & Greenaway, David & Wakelin, Katharine, 2001. "Who Benefits from Foreign Direct Investment in the UK?," Scottish Journal of Political Economy, Scottish Economic Society, vol. 48(2), pages 119-33, May.
  19. Richard Kneller, 2005. "Frontier Technology, Absorptive Capacity and Distance," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 67(1), pages 1-23, 02.
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