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7 Cards in this Set
- Front
- Back
Channels of Technical Progress
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- entrepreneurial activity making marginal improvements
- investment in R&D - technology transfer |
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Factors conductive to technical progress
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- the process of innovation - creative destruction - (good ideas are generated that replace bad ideas)
- equitable societies have larger pools of entrepreneurs - legal protection to entrepreneurs - good governance - good communication networks |
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Two country model of technology transfer
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- The US spends a lot more in R&D than other countries and yet some European countries have managed to keep up their standard of living close to the US
- through technology transfer - pages 215-223 in text |
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Two country model of technology transfer
key assumptions: |
the cost of copying goes down as the technology gap between the follower and the leading country widens
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two country model of technology transfer
key result: |
In steady-state the two countries will grow at the same rate
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Is the technology leader necessarily better off than the follower?
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- No
- Technology leader may be more productive but also devotes a higher fraction of labor force to R&D. This means it has a smaller fraction producing output - If imitation is cheap, then the follower could be better off than the leader. |
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Barriers to technology transfer
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- technology developed in developed countries may not be appropriate for the developing countries. For example, a capital intensive technology may not be suitable for a capital scarce country
- poor countries may lack skills to implement the foreign technology |