Openness, Technology Capital, and Development

Ellen McGrattan and Edward Prescott

No 13515, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: 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.

JEL-codes: F23 F41 O11 O32 (search for similar items in EconPapers)
Date: 2007-10
New Economics Papers: this item is included in nep-bec, nep-dev and nep-dge
Note: EFG IFM ITI
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Citations: View citations in EconPapers (11)

Published as McGrattan, Ellen R. & Prescott, Edward C., 2009. "Openness, technology capital, and development," Journal of Economic Theory, Elsevier, vol. 144(6), pages 2454-2476, November.

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Related works:
Journal Article: Openness, technology capital, and development (2009)
Working Paper: Openness, technology capital, and development (2008)
Working Paper: Openness, Technology Capital, and Development (2008)
Working Paper: Openness, technology capital, and development (2007)
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