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Innovation, Imitation and Entrepreneurship

  • Grace Li Ann Yong

    (Centre for Research in Pedagogy and Practice, National Institute of Education, Singapore)

  • Kong Weng Ho

    (Division of Economics,School of Humanities and Social Sciences, Nanyang Technological University, Singapore)

This paper analyzes the gradual shift in the technological paradigm of an economy as it approaches the world technology frontier. The model developed in this paper consists of firms which employ skilled workers as an important input in technological advancement, but the novel feature here is the entrepreneur, who is the brain of technological progress. The entrepreneur has to decide to undertake either imitative or innovative activities, of which decision both affects and is affected by the country’s distance to frontier. Specifically, the entrepreneur needs to have a minimum ability threshold level in order to carry out innovation. This endogenous threshold level falls as the economy moves closer to the technological frontier, enabling more entrepreneurs to be engaged in an innovation-based strategy, and consequently, moving the economy from a technological structure that is based on imitation of foreign technologies to one where domestic innovation dominates. The transitional dynamics of the model shows that there exists a steady state distance from the world frontier that countries will eventually converge to. We also find that it is possible for countries under certain conditions, to be trapped in a regime carrying out only imitation of world technologies.

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File URL: http://www.ntu.edu.sg/hss2/egc/wp/2006/2006-07.pdf
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Paper provided by Nanyang Technological University, School of Humanities and Social Sciences, Economic Growth Centre in its series Economic Growth Centre Working Paper Series with number 0607.

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Length: 31 pages
Date of creation: Jul 2006
Date of revision:
Handle: RePEc:nan:wpaper:0607
Contact details of provider: Postal: Nanyang Drive, Singapore 637332
Fax: 6795 5797
Web page: http://egc.hss.ntu.edu.sg/

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  1. 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.
  2. Romer, Paul M, 1990. "Endogenous Technological Change," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages S71-102, October.
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  4. Acemoglu, Daron & Aghion, Philippe & Zilibotti, Fabrizio, 2002. "Distance to Frontier, Selection, and Economic Growth," CEPR Discussion Papers 3467, C.E.P.R. Discussion Papers.
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  10. Papageorgiou, Chris, 2002. "Technology Adoption, Human Capital, and Growth Theory," Review of Development Economics, Wiley Blackwell, vol. 6(3), pages 351-68, October.
  11. Howitt, Peter & Mayer-Foulkes, David, 2005. "R&D, Implementation, and Stagnation: A Schumpeterian Theory of Convergence Clubs," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 37(1), pages 147-77, February.
  12. Daron Acemoglu & Philippe Aghion & Fabrizio Zilibotti, 2003. "Vertical Integration and Distance to Frontier," Journal of the European Economic Association, MIT Press, vol. 1(2-3), pages 630-638, 04/05.
  13. Xu, Bin, 2000. "Multinational enterprises, technology diffusion, and host country productivity growth," Journal of Development Economics, Elsevier, vol. 62(2), pages 477-493, August.
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  15. Segerstrom, P.S., 1990. "Innovation, Imitation And Economic Growth," Papers 8818, Michigan State - Econometrics and Economic Theory.
  16. David Audretsch & Michael Fritsch, 2003. "Linking Entrepreneurship to Growth: The Case of West Germany," Industry and Innovation, Taylor & Francis Journals, vol. 10(1), pages 65-73.
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