Why Doesn't Technology Flow from Rich to Poor Countries?
88 Pages Posted: 20 Oct 2011 Last revised: 3 Mar 2016
There are 3 versions of this paper
Why Doesn't Technology Flow from Rich to Poor Countries?
Why Doesn't Technology Flow from Rich to Poor Countries?
Why Doesn't Technology Flow from Rich to Poor Countries?
Date Written: March 1, 2016
Abstract
What is the role of a country's financial system in determining technology adoption? To examine this, a dynamic contract model is embedded into a general equilibrium setting with competitive intermediation. The terms of finance are dictated by an intermediary's ability to monitor and control a firm's cash flow, in conjunction with the structure of the technology that the firm adopts. It is not always profitable to finance promising technologies. A quantitative illustration is presented where financial frictions induce entrepreneurs in India and Mexico to adopt less-promising ventures than in the United States, despite lower input prices.
Keywords: Costly cash-flow control; costly state verification; dynamic contract theory; economic development; establishment-size distributions; finance and development; financial intermediation; India, Mexico, and the United States; long- and short-term contracts; monitoring; productivity; retained earnings
JEL Classification: D92, E13, G24, O11, O16
Suggested Citation: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
Misallocation and Manufacturing TFP in China and India
By Chang-tai Hsieh and Peter J. Klenow
-
Misallocation and Manufacturing TFP in China and India
By Chang-tai Hsieh and Peter J. Klenow
-
Growth Theory Through the Lens of Development Economics
By Abhijit V. Banerjee and Esther Duflo
-
Policy Distortions and Aggregate Productivity with Heterogeneous Plants
By Diego Restuccia and Richard Rogerson
-
The Unequal Effects of Liberalization: Evidence from Dismantling the License Raj in India
By Philippe Aghion, Robin Burgess, ...
-
The Unequal Effects of Liberalization: Evidence from Dismantling the License Raj in India
By Philippe Aghion, Robin Burgess, ...
-
The Unequal Effects of Liberalization: Evidence from Dismantling the License Raj in India
By Philippe Aghion, Stephen J. Redding, ...
-
The Unequal Effects of Liberalization: Evidence from Dismantling the License Raj in India
By Philippe Aghion, Robin Burgess, ...
-
Macroeconomic Implications of Size-Dependent Policies
By Nezih Guner, Gustavo Ventura, ...
-
By Zheng Michael Song, Kjetil Storesletten, ...