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TECHNOLOGY ADOPTION DURING THE PROCESS OF DEVELOPMENT: IMPLICATIONS FOR LONG-RUN PROSPECTS

Published online by Cambridge University Press:  27 July 2017

Verónica Mies
Verónica Mies*
Affiliation:
Pontificia Universidad Católica de Chile
*
Address correspondence to: Verónica Mies, Pontificia Universidad Católica de Chile, Vicuña Mackenna 4860, Macul, Santiago, Chile; e-mail: [email protected]
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Abstract

Most papers studying the impacts of technology adoption on income trajectories assume that firms adopt frontier technologies when available. If these technologies are skill intensive, less-developed economies may fail in successfully implementing them and may become trapped in a low-growth equilibrium. Within a Schumpeterian growth model, we show that differences in adoption barriers and incentives to the accumulation of skills produce differences in the technology level that is optimal to adopt. If the economy is not overly distorted, copying nonfrontier technologies helps compensating for the scarcity of skills and increases the likelihood of copying frontier technologies in the long run. If distortions are significant, it may be optimal to copy less-advanced technologies even in the long run. If adoption is not a skill-intensive activity, then copying frontier technologies is always optimal; all economies achieve a high-growth equilibrium and only income differences persist in the long run.

Keywords

R&D InvestmentTechnology AdoptionGrowth and DevelopmentTechnology ChoiceConvergence and PolarizationTransitional Dynamics
Type
Articles
Information
Macroeconomic Dynamics , Volume 23 , Issue 3 , April 2019 , pp. 907 - 942
Copyright
Copyright © Cambridge University Press 2017 

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Footnotes

I would like to thank participants at the North American Summer Meeting of the Econometric Society and the EEA/ESEM Meetings. I would also like to thank Rodrigo Fuentes, Andrea Repetto, Raimundo Soto, the editor and one anonymous referee for helpful comments and suggestions. I also acknowledge financial support from VRI-Inicio (INICIO 42/2014) and the National Fund for Science and Technology of Chile Fondecyt, grant number 1150433. The usual disclaimer applies.

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