Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/24874
Authors: 
Hübler, Michael
Lontzek, Thomas S.
Year of Publication: 
2009
Series/Report no.: 
Kiel Working Paper 1478
Abstract: 
We study the North-South diffusion of technologies embodied in internationally mobile capital in a framework of intertemporal global welfare maximization. Convergence of the growth rates of technical change in the North and South always occurs in the long-run. However, the degree to which the North-South technology gap can be narrowed depends crucially on the level of the absorptive capacity (human capital, infrastructure, legal framework, etc.) in the South. Performing own innovations in the South narrows the technology gap only in the short-run. An optimal development policy requires more capital to be allocated to the South in earlier stages of development. Allowing for optimal investment into the absorptive capacity, the absorptive capacity rises steadily with the aim to close the technology gap completely. Our results show that an optimal development policy requires FDI to be matched by investment into the absorptive capacity.
Subjects: 
Technology diffusion
technology transfer
capital mobility
human capital
absorptive capacity
JEL: 
F21
O11
O33
O47
Document Type: 
Working Paper

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