IDEAS home Printed from https://ideas.repec.org/p/unm/unumer/2022024.html
   My bibliography  Save this paper

Technology adoption, innovation policy and catching-up

Author

Listed:
  • Perilla Jiménez, Juan R.
  • Ziesemer, Thomas

    (Macro, International & Labour Economics, Mt Economic Research Inst on Innov/Techn, RS: GSBE MORSE)

Abstract

A model is proposed where economic growth is driven by innovation along the diffusion and adoption of technology from the frontier. Business innovation investments are related to households savings, which generates equilibria with low levels of, and equilibria with high levels of, innovation. Low-level equilibria are unstable. Starting from a position with low levels of investment and innovation, increasing investments are associated with high but decreasing dependence on international technology diffusion. A major objective of policy-making is to increase investment sufficiently in the lower end to reach the high level steady state. An economic rationale is provided for the existence of productivity improving equilibria, where distance to frontier countries is reduced owing to a tax and subsidy mechanism designed to boost innovation.

Suggested Citation

  • Perilla Jiménez, Juan R. & Ziesemer, Thomas, 2022. "Technology adoption, innovation policy and catching-up," MERIT Working Papers 2022-024, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    • Handle: RePEc:unm:unumer:2022024
    as

    Download full text from publisher

    File URL: https://cris.maastrichtuniversity.nl/ws/files/106568914/wp2022_024.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Romer, Paul M, 1986. "Increasing Returns and Long-run Growth," Journal of Political Economy, University of Chicago Press, vol. 94(5), pages 1002-1037, October.
    2. Jesse Perla & Christopher Tonetti & Michael E. Waugh, 2021. "Equilibrium Technology Diffusion, Trade, and Growth," American Economic Review, American Economic Association, vol. 111(1), pages 73-128, January.
    3. Caselli, Francesco, 2005. "Accounting for Cross-Country Income Differences," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 9, pages 679-741, Elsevier.
    4. Ramana Nanda & William R. Kerr, 2015. "Financing Innovation," Annual Review of Financial Economics, Annual Reviews, vol. 7(1), pages 445-462, December.
    5. Mariana Mazzucato, 2018. "Mission-oriented innovation policies: challenges and opportunities," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 27(5), pages 803-815.
    6. Romer, Paul, 1993. "Idea gaps and object gaps in economic development," Journal of Monetary Economics, Elsevier, vol. 32(3), pages 543-573, December.
    7. Daniel Chudnovsky & Andrés López & Martín Rossi & Diego Ubfal, 2006. "Evaluating a Program of Public Funding of Private Innovation Activities: An Econometric Study of FONTAR in Argentina," IDB Publications (Working Papers) 27158, Inter-American Development Bank.
    8. Frank R. Lichtenberg, 1988. "Government Subsidies to Private Military R&D Investment: DOD's IR&D Policy," NBER Working Papers 2745, National Bureau of Economic Research, Inc.
    9. Coe, David T. & Helpman, Elhanan, 1995. "International R&D spillovers," European Economic Review, Elsevier, vol. 39(5), pages 859-887, May.
    10. Wolfgang Keller, 2002. "Geographic Localization of International Technology Diffusion," American Economic Review, American Economic Association, vol. 92(1), pages 120-142, March.
    11. Jones, Charles I., 2005. "Growth and Ideas," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 16, pages 1063-1111, Elsevier.
    12. Daron Acemoglu & Philippe Aghion & Fabrizio Zilibotti, 2006. "Distance to Frontier, Selection, and Economic Growth," Journal of the European Economic Association, MIT Press, vol. 4(1), pages 37-74, March.
    13. Erika Farnstrand Damsgaard, 2008. "The World Distribution of Productivity: Country TFP Choice in a Nelson-Phelps Economy," 2008 Meeting Papers 176, Society for Economic Dynamics.
    14. Daniel Chudnovsky & Andrés López & Martín Rossi & Diego Ubfal, 2006. "Evaluating A Program of Public Funding of Private Innovation Activities. An Econometric Study of FONTAR in Argentina," OVE Working Papers 1606, Inter-American Development Bank, Office of Evaluation and Oversight (OVE).
    15. Stiglitz, Joseph E., 2015. "Leaders and followers: Perspectives on the Nordic model and the economics of innovation," Journal of Public Economics, Elsevier, vol. 127(C), pages 3-16.
    16. Nelson, Richard R & Pack, Howard, 1999. "The Asian Miracle and Modern Growth Theory," Economic Journal, Royal Economic Society, vol. 109(457), pages 416-436, July.
    17. Gene M. Grossman & Elhanan Helpman, 1991. "Quality Ladders in the Theory of Growth," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 58(1), pages 43-61.
    18. Wolfgang Keller, 2004. "International Technology Diffusion," Journal of Economic Literature, American Economic Association, vol. 42(3), pages 752-782, September.
    19. Aghion, Philippe & Howitt, Peter, 1992. "A Model of Growth through Creative Destruction," Econometrica, Econometric Society, vol. 60(2), pages 323-351, March.
    20. Barro, Robert J & Sala-i-Martin, Xavier, 1997. "Technological Diffusion, Convergence, and Growth," Journal of Economic Growth, Springer, vol. 2(1), pages 1-26, March.
    21. Abramovitz, Moses, 1986. "Catching Up, Forging Ahead, and Falling Behind," The Journal of Economic History, Cambridge University Press, vol. 46(2), pages 385-406, June.
    22. Lin, Justin Yifu & Monga, Celestin, 2011. "Growth identification and facilitation : the role of the state in the dynamics of structural change," Policy Research Working Paper Series 5313, The World Bank.
    23. Edwards, Sebastian, 1998. "Openness, Productivity and Growth: What Do We Really Know?," Economic Journal, Royal Economic Society, vol. 108(447), pages 383-398, March.
    24. Caselli, Francesco, 2005. "Accounting for cross-country income differences," LSE Research Online Documents on Economics 5266, London School of Economics and Political Science, LSE Library.
    25. Bruno Crepon & Emmanuel Duguet & Jacques Mairesse, 1998. "Research, Innovation And Productivity: An Econometric Analysis At The Firm Level," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 7(2), pages 115-158.
    26. Hall, Bronwyn H. & Lerner, Josh, 2010. "The Financing of R&D and Innovation," Handbook of the Economics of Innovation, in: Bronwyn H. Hall & Nathan Rosenberg (ed.), Handbook of the Economics of Innovation, edition 1, volume 1, chapter 0, pages 609-639, Elsevier.
    27. Peter Egger & Christian Keuschnigg, 2015. "Innovation, Trade, and Finance," American Economic Journal: Microeconomics, American Economic Association, vol. 7(2), pages 121-157, May.
    28. repec:zbw:bofrdp:urn:nbn:fi:bof-201512141480 is not listed on IDEAS
    29. Philippe Aghion & Thibault Fally & Stefano Scarpetta, 2007. "Credit constraints as a barrier to the entry and post-entry growth of firms [‘Dualism and macroeconomic volatility’]," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 22(52), pages 732-779.
    30. Philippe Aghion & Peter Howitt, 2006. "Joseph Schumpeter Lecture Appropriate Growth Policy: A Unifying Framework," Journal of the European Economic Association, MIT Press, vol. 4(2-3), pages 269-314, 04-05.
    31. Matthew R. Denes & Sabrina T. Howell & Filippo Mezzanotti & Xinxin Wang & Ting Xu, 2020. "Investor Tax Credits and Entrepreneurship: Evidence from U.S. States," NBER Working Papers 27751, National Bureau of Economic Research, Inc.
    32. Sabrina T. Howell, 2017. "Financing Innovation: Evidence from R&D Grants," American Economic Review, American Economic Association, vol. 107(4), pages 1136-1164, April.
    33. Jess Benhabib & Jesse Perla & Christopher Tonetti, 2014. "Catch-up and fall-back through innovation and imitation," Journal of Economic Growth, Springer, vol. 19(1), pages 1-35, March.
    34. Robert E. Lucas, 2009. "Trade and the Diffusion of the Industrial Revolution," American Economic Journal: Macroeconomics, American Economic Association, vol. 1(1), pages 1-25, January.
    35. Lerner, Josh, 1999. "The Government as Venture Capitalist: The Long-Run Impact of the SBIR Program," The Journal of Business, University of Chicago Press, vol. 72(3), pages 285-318, July.
    36. Robert E. Hall & Charles I. Jones, 1999. "Why do Some Countries Produce So Much More Output Per Worker than Others?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 114(1), pages 83-116.
    37. Edward C. Prescott & Stephen L. Parente, 1999. "Monopoly Rights: A Barrier to Riches," American Economic Review, American Economic Association, vol. 89(5), pages 1216-1233, December.
    38. Turnovsky, Stephen J, 1996. "Fiscal Policy, Adjustment Costs, and Endogenous Growth," Oxford Economic Papers, Oxford University Press, vol. 48(3), pages 361-381, July.
    39. Baumol, William J., 1996. "Entrepreneurship: Productive, unproductive, and destructive," Journal of Business Venturing, Elsevier, vol. 11(1), pages 3-22, January.
    40. Paul M. Romer, 2001. "Should the Government Subsidize Supply or Demand in the Market for Scientists and Engineers?," NBER Chapters, in: Innovation Policy and the Economy, Volume 1, pages 221-252, National Bureau of Economic Research, Inc.
    41. Daron Acemoglu, 2015. "Localised and Biased Technologies: Atkinson and Stiglitz's New View, Induced Innovations, and Directed Technological Change," Economic Journal, Royal Economic Society, vol. 0(583), pages 443-463, March.
    42. Nelson, Andrew & Earle, Andrew & Howard-Grenville, Jennifer & Haack, Julie & Young, Doug, 2014. "Do innovation measures actually measure innovation? Obliteration, symbolic adoption, and other finicky challenges in tracking innovation diffusion," Research Policy, Elsevier, vol. 43(6), pages 927-940.
    43. Paul M. Romer, 1994. "The Origins of Endogenous Growth," Journal of Economic Perspectives, American Economic Association, vol. 8(1), pages 3-22, Winter.
    44. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
    45. Ben Bernanke & Mark Gertler, 1990. "Financial Fragility and Economic Performance," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 105(1), pages 87-114.
    46. repec:zbw:bofrdp:2015_028 is not listed on IDEAS
    47. Howitt, Peter & Aghion, Philippe, 2006. "Appropriate Growth Policy: A Unifying Framework," Scholarly Articles 4554121, Harvard University Department of Economics.
    48. Bronwyn H. Hall & Nathan Rosenberg (ed.), 2010. "Handbook of the Economics of Innovation," Handbook of the Economics of Innovation, Elsevier, edition 1, volume 1, number 1.
    49. Romer, Paul M, 1990. "Endogenous Technological Change," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages 71-102, October.
    50. Mariana Mazzucato, 2013. "Financing innovation: creative destruction vs. destructive creation," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 22(4), pages 851-867, August.
    51. Segerstrom, Paul S, 1998. "Endogenous Growth without Scale Effects," American Economic Review, American Economic Association, vol. 88(5), pages 1290-1310, December.
    52. Peretto, Pietro F., 1999. "Cost reduction, entry, and the interdependence of market structure and economic growth," Journal of Monetary Economics, Elsevier, vol. 43(1), pages 173-195, February.
    53. Dirk Willem te Velde & Justin Lin & Célestin Monga & Suresh D. Tendulkar & Alice Amsden & K. Y. Amoako & Howard Pack & Wonhyuk Lim, 2011. "DPR Debate: Growth Identification and Facilitation: The Role of the State in the Dynamics of Structural Change," Development Policy Review, Overseas Development Institute, vol. 29(3), pages 259-310, May.
    54. Caselli, Francesco, 2005. "Accounting for cross-country income differences," LSE Research Online Documents on Economics 3567, London School of Economics and Political Science, LSE Library.
    55. Stephen L. Parente & Edward C. Prescott, 2002. "Barriers to Riches," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262661306, April.
    56. Peter Howitt, 1999. "Steady Endogenous Growth with Population and R & D Inputs Growing," Journal of Political Economy, University of Chicago Press, vol. 107(4), pages 715-730, August.
    57. Acemoglu, Daron, 2012. "Introduction to economic growth," Journal of Economic Theory, Elsevier, vol. 147(2), pages 545-550.
    58. Dan Breznitz & Darius Ornston & Steven Samford, 2018. "Mission critical: the ends, means, and design of innovation agencies," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 27(5), pages 883-896.
    59. Nancy Stokey, 2015. "Catching up and falling behind," Journal of Economic Growth, Springer, vol. 20(1), pages 1-36, March.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Juan Ricardo Perilla Jimenez, 2019. "Mainstream and evolutionary views of technology, economic growth and catching up," Journal of Evolutionary Economics, Springer, vol. 29(3), pages 823-852, July.
    2. Cem Ertur & Wilfried Koch, 2007. "Growth, technological interdependence and spatial externalities: theory and evidence," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 22(6), pages 1033-1062.
    3. Abdin, Joynal & Sharma, Abhijit & Trivedi, Rohit & Wang, Chengang, 2024. "Financing constraints, intellectual property rights protection and incremental innovation: Evidence from transition economy firms," Technological Forecasting and Social Change, Elsevier, vol. 198(C).
    4. Edwin Goni & William F. Maloney, 2014. "Why don’t Poor Countries do R&D?," Documentos CEDE 11947, Universidad de los Andes, Facultad de Economía, CEDE.
    5. Goñi, Edwin & Maloney, William F., 2017. "Why don’t poor countries do R&D? Varying rates of factor returns across the development process," European Economic Review, Elsevier, vol. 94(C), pages 126-147.
    6. Capolupo, Rosa, 2009. "The New Growth Theories and Their Empirics after Twenty Years," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 3, pages 1-72.
    7. Cem Ertur & Wilfried Koch, 2008. "A Contribution to the Schumpeterian Growth Theory and Empirics," Post-Print halshs-00327641, HAL.
    8. Cem Ertur & Wilfried Koch, 2011. "A contribution to the theory and empirics of Schumpeterian growth with worldwide interactions," Journal of Economic Growth, Springer, vol. 16(3), pages 215-255, September.
    9. Amavilah, Voxi Heinrich, 2014. "Knowledge = Technology + Human Capital and the Lucas and Romer Production Functions," MPRA Paper 58847, University Library of Munich, Germany.
    10. Richard M. H. Suen, 2013. "Research Policy and U.S. Economic Growth," Working papers 2013-18, University of Connecticut, Department of Economics.
    11. Klenow, Peter J. & Rodriguez-Clare, Andres, 2005. "Externalities and Growth," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 11, pages 817-861, Elsevier.
    12. Onyimadu, Chukwuemeka, 2015. "A Case of Growth Without Development: A Comparative Study Between Nigeria and Malaysia," MPRA Paper 77202, University Library of Munich, Germany.
    13. Juan Ricardo Perilla Jiménez, 2020. "Testing the impact of technology diffusion and innovation on long-run growth using cointegration techniques," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 29(6), pages 748-773, August.
    14. Jones, C.I., 2016. "The Facts of Economic Growth," Handbook of Macroeconomics, in: J. B. Taylor & Harald Uhlig (ed.), Handbook of Macroeconomics, edition 1, volume 2, chapter 0, pages 3-69, Elsevier.
    15. Perilla Jimenez, Juan, 2022. "Income per-capita across-countries," MERIT Working Papers 2022-033, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    16. Sumbal Fatima & Bateer Chen & Muhammad Ramzan & Qamar Abbas, 2020. "The Nexus Between Trade Openness and GDP Growth: Analyzing the Role of Human Capital Accumulation," SAGE Open, , vol. 10(4), pages 21582440209, November.
    17. Mark Rogers, 2003. "A Survey of Economic Growth," The Economic Record, The Economic Society of Australia, vol. 79(244), pages 112-135, March.
    18. Adriana Di Liberto, 2007. "Convergence and Divergence in Neoclassical Growth Models with Human Capital," Economia politica, Società editrice il Mulino, issue 2, pages 289-322.
    19. Tamura, Robert & Dwyer, Jerry & Devereux, John & Baier, Scott, 2019. "Economic growth in the long run," Journal of Development Economics, Elsevier, vol. 137(C), pages 1-35.
    20. Banerjee, Rajabrata & Roy, Saikat Sinha, 2014. "Human capital, technological progress and trade: What explains India's long run growth?," Journal of Asian Economics, Elsevier, vol. 30(C), pages 15-31.

    More about this item

    JEL classification:

    • C62 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Existence and Stability Conditions of Equilibrium
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:unm:unumer:2022024. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Ad Notten (email available below). General contact details of provider: https://edirc.repec.org/data/meritnl.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.