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

84 Pages Posted: 20 Jan 2015

See all articles by Harold L. Cole

Harold L. Cole

University of Pennsylvania - Department of Economics; National Bureau of Economic Research (NBER)

Jeremy Greenwood

University of Pennsylvania - Department of Economics; National Bureau of Economic Research (NBER)

Juan M. Sánchez

Federal Reserve Banks - Federal Reserve Bank of St. Louis

Multiple version iconThere are 3 versions of this paper

Date Written: January 2015

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

Cole, Harold L. and Greenwood, Jeremy and Sanchez, Juan M., Why Doesn't Technology Flow from Rich to Poor Countries? (January 2015). NBER Working Paper No. w20856. Available at SSRN: https://ssrn.com/abstract=2551664

Harold L. Cole (Contact Author)

University of Pennsylvania - Department of Economics ( email )

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Jeremy Greenwood

University of Pennsylvania - Department of Economics ( email )

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Juan M. Sanchez

Federal Reserve Banks - Federal Reserve Bank of St. Louis ( email )

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Saint Louis, MO 63011
United States

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