EconPapers    
Economics at your fingertips  
 

Firms and Technology Adoption: The Role of Political Institutions and Market Size (Article)

Ahmed Qasim

The Pakistan Development Review, 2023, vol. 62, issue 1, 61-85

Abstract: The study presents a political economy model and analyses how firms behave towards technology up-gradation given the different dynamics of political and market institutions. The model presented here depicts that political power is controlled by the elite, who formulate trade policy to consolidate power. While the middle-class access the production technology and the labour class provides labour inelastically. The model shows that the technology adoption decision of a firm essentially depends upon the political institutions and the market size of the country. Firms in a country with strong democratic institutions adopt new technology more rapidly. While in a weak democracy, firms successfully persuade the elite policymaker to impose higher trade restrictions and obtain higher protection from technologically advanced foreign firms. Moreover, the model also shows that firms operating in a large market adopt technology more rapidly since a large market has a high price elasticity of demand and supports a large number of larger firms. Furthermore, firms adopt technologies more swiftly when the productivity gains from the adoption are relatively large.

Keywords: Political Economy; Technological Diffusion; Trade Policy; Rent-seeking; Lobbying (search for similar items in EconPapers)
JEL-codes: D72 F12 O33 O38 P16 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://file.pide.org.pk/pdfpdr/2023/61-85.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pid:journl:v:62:y:2023:i:1:p:61-85

Access Statistics for this article

More articles in The Pakistan Development Review from Pakistan Institute of Development Economics Contact information at EDIRC.
Bibliographic data for series maintained by Khurram Iqbal ().

 
Page updated 2025-03-19
Handle: RePEc:pid:journl:v:62:y:2023:i:1:p:61-85