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

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Listed author(s):
  • 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.

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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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Find related papers by 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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  1. James R. Tybout, 2000. "Manufacturing Firms in Developing Countries: How Well Do They Do, and Why?," Journal of Economic Literature, American Economic Association, vol. 38(1), pages 11-44, March.
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  3. Jeremy Greenwood & Juan M. Sanchez & Cheng Wang, 2010. "Financing Development: The Role of Information Costs," American Economic Review, American Economic Association, vol. 100(4), pages 1875-1891, September.
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  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.
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Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. The missing North-South flow of technology
    by Economic Logician in Economic Logic on 2012-11-09 15:50:00
Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
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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. 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.
  3. 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.
  4. Santaeulàlia-Llopis, Raül ; Zheng, Yu, 2016. "The Price of Growth: Consumption Insurance in China 1989-2009," Economics Working Papers ECO2016/13, European University Institute.
  5. Era Dabla-Norris & Yan Ji & Robert 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.

This item is featured on the following reading lists or Wikipedia pages:

  1. Why Doesn't Technology Flow From Rich to Poor Countries? (ECTA 2016) in ReplicationWiki

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