The Economics of Inefficient Technology Use
The adoption and diffusion of technological knowledge is generally regarded as a key element in a country's economic success. However, as is the case with most types of information, the transfer of technological knowledge is likely to be subject to adverse selection problems. In this paper we examine whether asymmetric information regarding who knows how to run a new technology efficiently can explain a set of observations regarding within and cross-country patterns of technology diffusion. In particular, we show how the dynamics of adverse selection in the market for technological knowhow can explain (1) why inefficient technology use may take over a market even when better practice is available, (2) why widespread inefficient use may persist unless a critical mass of firms switch to best practice, (3) why efficient adoption of new technologies is more likely to occur where the existing technology is already productive, where wages are already relatively high, and where the new technology is not too great an advance over the old one, and (4) why the international mobility of knowledgeable individuals does not guarantee the diffusion of best practice technology across countries.
|Date of creation:||Oct 2007|
|Date of revision:|
|Contact details of provider:|| Postal: |
Web page: http://www.nber.org
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- David De Ferranti & Guillermo E. Perry & Indermit Gill & J. Luis Guasch & William F. Maloney & Carolina Sanchez-Paramo & Norbert Schady, 2003. "Closing the Gap in Education and Technology," World Bank Publications, The World Bank, number 15168.
- Paul Beaudry & Patrick Francois, 2010.
"Managerial Skills Acquisition and the Theory of Economic Development,"
Review of Economic Studies,
Oxford University Press, vol. 77(1), pages 90-126.
- Paul Beaudry & Patrick Francois, 2005. "Managerial Skill Acquisition and the Theory of Economic Development," NBER Working Papers 11451, National Bureau of Economic Research, Inc.
- Bronwyn H. Hall & Beethika Khan, 2004.
"Adoption of New Technology,"
Development and Comp Systems
- Bronwyn H. Hall & Beethika Khan, 2003. "Adoption of New Technology," NBER Working Papers 9730, National Bureau of Economic Research, Inc.
- Hall, Bronwyn H. & Khan, Beethika, 2003. "Adoption of New Technology," Department of Economics, Working Paper Series qt3wg4p528, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
- Richard K. Johanson & Arvil V. Adams, 2004. "Skills Development in Sub-Saharan Africa," World Bank Publications, The World Bank, number 15028.
- Eric Bartelsman & John Haltiwanger & Stefano Scarpetta, 2006. "Reallocation and Productivity Growth: The FAQs," 2006 Meeting Papers 293, Society for Economic Dynamics.
- Lucas, Robert E, Jr, 1990. "Why Doesn't Capital Flow from Rich to Poor Countries?," American Economic Review, American Economic Association, vol. 80(2), pages 92-96, May.
- Richard Rogerson & Diego Restuccia, 2004.
"Policy Distortions and Aggregate Productivity with Heterogeneous Plants,"
2004 Meeting Papers
69, Society for Economic Dynamics.
- Diego Restuccia & Richard Rogerson, 2008. "Policy Distortions and Aggregate Productivity with Heterogeneous Plants," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 11(4), pages 707-720, October.
- Diego Restuccia & Richard Rogerson, 2007. "Policy Distortions and Aggregate Productivity with Heterogeneous Plants," NBER Working Papers 13018, National Bureau of Economic Research, Inc.
- Diego Restuccia & Richard Rogerson, 2007. "Policy Distortions and Aggregate Productivity with Heterogeneous Plants," Working Papers tecipa-283, University of Toronto, Department of Economics.
- Biggs, T. & Shah, M. & Srivastava, P., 1995. "Technological Capabilities and Learning in African Enterprises," Papers 288, World Bank - Technical Papers.
- Chang-Tai Hsieh & Peter J. Klenow, 2007.
"Relative Prices and Relative Prosperity,"
American Economic Review,
American Economic Association, vol. 97(3), pages 562-585, June.
When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:13500. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ()
If references are entirely missing, you can add them using this form.