TY  - JOUR
AU  - McGrattan,Ellen
AU  - Prescott,Edward C.
TI  - Openness, Technology Capital, and Development
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 13515
PY  - 2007
Y2  - October 2007
UR  - http://www.nber.org/papers/w13515
L1  - http://www.nber.org/papers/w13515.pdf
N1  - Author contact info:
Ellen McGrattan
Research Department
Federal Reserve Bank of Minneapolis
90 Hennepin Avenue
Minneapolis, MN 55480
Tel: 612/204-5523
Fax: 612/204-5515
E-Mail: erm@mcgrattan.mpls.frb.fed.us

Edward C. Prescott
Arizona State University
Economics Department
P. O. Box 879801
Tempe, AZ 85287-9801
E-Mail: edward.prescott@asu.edu
AB  - In this paper, we extend the growth model to include firm-specific technology capital and use it to assess the gains from opening to foreign direct investment. A firm's technology capital is its unique know-how from investing in research and development, brands, and organization capital.  What distinguishes technology capital from other forms of capital is the fact that a firm can use it simultaneously in multiple domestic and foreign locations. Foreign technology capital is exploited by permitting foreign direct investment by multinationals.  In both steady-state and transitional analyses, the extended growth model predicts large gains to being open.
ER  -