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Why Doesn't Technology Flow from Rich to Poor Countries?

Listed author(s):
  • Harold L. Cole
  • Jeremy Greenwood
  • Juan M. Sanchez

What determines the technology that a country adopts? While many factors affect technological adoption, the efficiency of the country's financial system may also play a significant role. To address this question, a dynamic contract model is embedded into a general equilibrium setting with competitive intermediation. The ability of an intermediary to monitor and control the cash flows of a firm plays an important role in the technology adoption decision. Can such a theory help to explain the differences in total factor productivity and establishment-size distributions across India, Mexico, and the United States? A quantitative illustration suggests the answer is yes.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 20856.

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Date of creation: Jan 2015
Publication status: published as Harold L. Cole & Jeremy Greenwood & Juan M. Sanchez, 2016. "Why Doesn't Technology Flow From Rich to Poor Countries?," Econometrica, Econometric Society, vol. 84, pages 1477-1521, 07.
Handle: RePEc:nbr:nberwo:20856
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