Why doesn’t technology flow from rich to poor countries?
Harold L. Cole,
Jeremy Greenwood and
No 2012-040, Working Papers from Federal Reserve Bank of St. Louis
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.
Keywords: Cash flow; Economic development; Technology - Economic aspects; India; Mexico (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dge
Date: 2012, Revised 2015-10-01
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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? (2014)
Working Paper: Why Doesn't Technology Flow from Rich to Poor Countries? (2012)
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