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- Publisher
- de Gruyter
- Copyright
- ©2011 Walter de Gruyter GmbH & Co. KG, Berlin/Boston
- ISSN
- 1935-1690
- eISSN
- 1534-5998
- DOI
- 10.2202/1534-5998.1249
- Publisher site
- See Article on Publisher Site
Abstract
AbstractTechnology adoption in follower countries can be accomplished by local R&D activities, but it can also be achieved without formal R&D, for example, by foreign direct investment. Empirical evidence suggests that current R&D activities often expand local knowledge for future R&D, while adoption without R&D does not seem to have this effect. We formalize this idea in a quality-ladder growth model and find that this biased externality results in multiple steady states: In the long run, countries with sufficient initial knowledge and human capital converge to a state in which R&D is locally undertaken and thus become relatively rich, while other countries fully rely on technology adoption without R&D and stay poor. Switching regression using cross-country data supports the presence of multiple steady states in R&D expenditures.
Journal
The B E Journal of Macroeconomics – de Gruyter
Published: Feb 1, 2005
Keywords: technology adoption; local R&D activities; multinational enterprises; multiple steady states; switching regression