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

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  • Harold L. Cole
  • Jeremy Greenwood
  • Juan M. Sanchez

Abstract

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.

Suggested Citation

  • Harold L. Cole & Jeremy Greenwood & Juan M. Sanchez, 2015. "Why Doesn't Technology Flow from Rich to Poor Countries?," NBER Working Papers 20856, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:20856
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    References listed on IDEAS

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    Cited by:

    1. Chang-Tai Hsieh & Peter J. Klenow, 2014. "The Life Cycle of Plants in India and Mexico," The Quarterly Journal of Economics, Oxford University Press, vol. 129(3), pages 1035-1084.
    2. Johannes Boehm, 2014. "The Impact of Contract Enforcement Costs on Outsourcing and Aggregate Productivity," 2014 Meeting Papers 340, Society for Economic Dynamics.
    3. repec:aea:aejmac:v:10:y:2018:i:4:p:1-35 is not listed on IDEAS
    4. Çagatay Bircan & Ralph de Haas, 2015. "The Limits of Lending: Banks and Technology Adoption across Russia," CESifo Working Paper Series 5461, CESifo Group Munich.
    5. Jeremy Greenwood & Juan Sanchez & Cheng Wang, 2013. "Quantifying the Impact of Financial Development on Economic Development," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 16(1), pages 194-215, January.
    6. Nezih Guner & Andrii Parkhomenko & Gustavo Ventura, 2017. "Managers and Productivity Differences," Working Papers wp2018_1710, CEMFI.
    7. Greenwood, Jeremy & Han, Pengfei & Sanchez, Juan M., 2017. "Financing Ventures: Some Macroeconomics," Working Papers 2017-35, Federal Reserve Bank of St. Louis, revised 01 Jun 2019.
    8. Jeremy Greenwood & Pengfei Han & Juan M. Sanchez, 2018. "Financing Ventures," NBER Working Papers 24808, National Bureau of Economic Research, Inc.
    9. repec:eee:jetheo:v:176:y:2018:i:c:p:311-341 is not listed on IDEAS
    10. Francisco Queiró, 2018. "Entrepreneurial Human Capital and Firm Dynamics," GEE Papers 00116, Gabinete de Estratégia e Estudos, Ministério da Economia, revised Dec 2018.
    11. Raül Santaeulàlia-Llopis & Yu Zheng, 2018. "The Price of Growth: Consumption Insurance in China 1989–2009," American Economic Journal: Macroeconomics, American Economic Association, vol. 10(4), pages 1-35, October.
    12. Johannes Boehm, 2014. "The Impact of Contract Enforcement Costs on Outsourcing and Aggregate Productivity," 2014 Meeting Papers 340, Society for Economic Dynamics.
    13. Nezih Guner & Andrii Parkhomenko & Gustavo Ventura, 2018. "Managers and Productivity Differences," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 29, pages 256-282, July.
    14. Dutz, Mark A., 2013. "Resource reallocation and innovation : converting enterprise risks into opportunities," Policy Research Working Paper Series 6534, The World Bank.
    15. repec:eee:deveco:v:133:y:2018:i:c:p:220-230 is not listed on IDEAS
    16. Francisco Queiró, 2018. "Entrepreneurial Human Capital and Firm Dynamics," GEE Papers 00116, Gabinete de Estratégia e Estudos, Ministério da Economia, revised Dec 2018.
    17. Nezih Guner & Andrii Parkhomenko & Gustavo Ventura, 2018. "Managers and Productivity Differences," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 29, pages 256-282, July.
    18. Johannes Boehm, 2014. "The Impact of Contract Enforcement Costs on Outsourcing and Aggregate Productivity," 2014 Meeting Papers 340, Society for Economic Dynamics.
    19. Ying Feng & David Lagakos & James E. Rauch, 2018. "Unemployment and Development," NBER Working Papers 25171, National Bureau of Economic Research, Inc.
    20. Diego Restuccia & Richard Rogerson, 2013. "Misallocation and productivity," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 16(1), pages 1-10, January.
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    23. repec:eee:deveco:v:130:y:2018:i:c:p:203-223 is not listed on IDEAS
    24. Era Dabla-Norris & Yan Ji & Robert M. Townsend & Filiz D Unsal, 2015. "Identifying Constraints to Financial Inclusion and Their Impact on GDP and Inequality; A Structural Framework for Policy," IMF Working Papers 15/22, International Monetary Fund.

    More about this item

    JEL classification:

    • D92 - Microeconomics - - Micro-Based Behavioral Economics - - - Intertemporal Firm Choice, Investment, Capacity, and Financing
    • E13 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Neoclassical
    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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