Quality of Knowledge Technology, Returns to Production Technology and Economic Development

Cuong Le Van () and Çağrı Sağlam
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Cuong Le Van: CERMSEM - CEntre de Recherche en Mathématiques, Statistique et Économie Mathématique - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique

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Abstract: We incorporate a production technology that exhibits increasing returns to scale for small values of the capital stock and diminishing returns for the higher stocks at the firm level in a discrete-time version of Romer's endogenous growth model. We study the social planner's problem where the social production technology exhibits globally increasing returns to scale. The properties of the optimal paths are charaxterized. It is proved that for a given quality of knowledge technology, the countries can take off if their initial stock of capital is above a critical value. We nalyze the effect of three factors on the critical value: initial knowledge, quality of knowledge technology, and level of fixed costs associated with production.

Keywords: Optimal Growth; Optimal Path; Increasing Returns; Poverty Trap (search for similar items in EconPapers)
Date: 2004-04
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Citations: View citations in EconPapers (8)

Published in Macroeconomic Dynamics, 2004, 8 (2), pp.147-161. ⟨10.1017/S1365100503030086⟩

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Related works:
Journal Article: QUALITY OF KNOWLEDGE TECHNOLOGY, RETURNS TO PRODUCTION TECHNOLOGY, AND ECONOMIC DEVELOPMENT (2004)
Working Paper: Quality of Knowledge Technology, Returns to Production Technology and Economic Development (2004)
Working Paper: Quality of Knowledge Technology, Returns to Production Technology and Economic Development (2001)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:halshs-00118994

DOI: 10.1017/S1365100503030086

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