Technology Adoption in Follower Countries: With or Without Local R&D Activities?

Yasuyuki Todo

ESRI Discussion paper series from Economic and Social Research Institute (ESRI)

Abstract: This paper develops an endogenous growth model incorporating quality improvement, focusing on a follower country that lags behind the world technology frontier and adopts new technology with adaptation to local circumstances. We assume two forms of adaptation: inventive adaptation, which requires formal local R&D activities, and minor adaptation without R&D. Although current R&D activities expand local knowledge for future R&D, minor adaptation without R&D does not. The main result in the paper is that countries with sufficient local knowledge and skilled labor initially depend on technology adoption without R&D but then depend on local R&D, while other countries continue to depend on adoption without R&D. Switching regression using cross-country data supports the presence of multiple steady-state equilibria.

Pages: 39 pages
Date: 2004-05
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Journal Article: Technology Adoption in Follower Countries: With or Without Local R&D Activities? (2005)
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