Openness, Technology Capital, and Development

Ellen R. McGrattan and Edward C. 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)
New Economics Papers: this item is included in nep-bec, nep-dev and nep-dge
Date: 2007-10
Note: EFG IFM ITI
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Working Paper: Openness, technology capital, and development (2007)
Working Paper: Openness, technology capital, and development (2008)
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