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Olivier Bruno, Cuong Le Van, Benoît Masquin, 2008. "When Does a Developing Country Use New
Technologies?"
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| Published as:
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| Olivier Bruno, Cuong Le Van, Benoît Masquin, 2009. When Does a Developing Country Use New Technologies?, Economic Theory, Volume 40, Number 2 / August, 2009
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| Abstract: |
| We develop a model of optimal pattern of economic development
that is first rooted in physical capital accumulation and then in technical
progress. We study an economy where capital accumulation and
innovative activity take place within a two sector model. The first sector
produces a consumption good using physical capital and non skilled
labor. Technological progress in the consumption sector is driven by
the research activity that takes place in the second sector. Research
activity which produces new technologies requires technological capital
and skilled labor. New technologies induce an endogenous increase of
the Total Factor Productivity of the consumption sector. Physical and
technological capital are not substitutable while skilled and non skilled
labor may be substitutable.
We show that under conditions of the adoption process of new technologies,
the optimal strategy for a developing country consists in accumulating
physical capital first; postponing the importation of technological
capital to the second stage of development. This result is
due to a threshold effect from which new technologies begin to have
an impact on the productivity of the consumption sector. However,
we show that once a certain level of wealth is reached, it becomes optimal
for the economy to import technological capital to produce new
technologies. |
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