Why Doesn't Technology Flow from Rich to Poor Countries?
Harold Cole (),
Jeremy Greenwood and
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Harold Cole: University of Pennsylvania, http://www.sas.upenn.edu/~colehl/
No 25, Economie d'Avant Garde Research Reports from Economie d'Avant Garde
What is the role of a country's financial system in determining technology adoption? To examine this, a dynamic contract model is embedded into a general equilibrium setting with competitive intermediation. The terms of finance are dictated by an intermediary's ability to monitor and control a firm's cash flow, in conjunction with the structure of the technology that the firm adopts. It is not always profitable to finance promising technologies. A quantitative illustration is presented where financial frictions induce entrepreneurs in India and Mexico to adopt less-promising ventures than in the United States, despite lower input prices. In Econometrica (July 2016), v. 84, n. 4: 1477-1521.
Keywords: Costly cash-flow control; costly state verification; dynamic contract theory; economic development; establishment-size distributions; finance and development; financial intermediation; India, Mexico, and the United States; long- and short-term contract; monitoring; productivity; retained earnings; self-finance; technology adoption; ventures (search for similar items in EconPapers)
JEL-codes: E13 O11 O16 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dge and nep-mac
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Journal Article: Why Doesn't Technology Flow From Rich to Poor Countries? (2016)
Working Paper: Why Doesn't Technology Flow from Rich to Poor Countries? (2016)
Working Paper: Why doesn’t technology flow from rich to poor countries? (2015)
Working Paper: Why Doesn't Technology Flow from Rich to Poor Countries? (2015)
Working Paper: Why Doesn't Technology Flow from Rich to Poor Countries? (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:eag:rereps:25
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