NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Why Doesn't Technology Flow from Rich to Poor Countries?

Harold L. Cole, Jeremy Greenwood, Juan M. Sanchez

NBER Working Paper No. 20856
Issued in January 2015
NBER Program(s):Economic Fluctuations and Growth

What determines the technology that a country adopts? While many factors affect technological adoption, the efficiency of the country's financial system may also play a significant role. To address this question, a dynamic contract model is embedded into a general equilibrium setting with competitive intermediation. The ability of an intermediary to monitor and control the cash flows of a firm plays an important role in the technology adoption decision. Can such a theory help to explain the differences in total factor productivity and establishment-size distributions across India, Mexico, and the United States? A quantitative illustration suggests the answer is yes.

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Document Object Identifier (DOI): 10.3386/w20856

Published: Harold L. Cole & Jeremy Greenwood & Juan M. Sanchez, 2016. "Why Doesn't Technology Flow From Rich to Poor Countries?," Econometrica, Econometric Society, vol. 84, pages 1477-1521, 07. citation courtesy of

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