Public Investment, Taxation and Transfer of Technology

Iraklis Kollias, Sugata Marjit and Nickolas Michelacakis

MPRA Paper from University Library of Munich, Germany

Abstract: A low wage developing economy (South) is interested in accessing and attracting superior technology from a high wage developed economy (North) with firms having heterogeneous quality of technology. To improve upon the initial market equilibrium, which shows that relatively inefficient technologies will move to the South, the host government invests in infrastructure financed through taxing the foreign firms. We discuss the problem of existence of such a tax-transfer mechanism within a balanced budget framework. We argue that such a policy can increase tax revenue as well as instigate the transfer of better quality technology. It turns out that this policy is more likely to be successful when the production concerns high value, high price products in low wage economies. Our results improve upon the conventional strategy of a tax break.

Keywords: public investment; tax; high-low wage economy; technology transfer; model (search for similar items in EconPapers)
JEL-codes: D42 H21 O33 (search for similar items in EconPapers)
Date: 2017-04
New Economics Papers: this item is included in nep-pbe and nep-pub
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Related works:
Journal Article: PUBLIC INVESTMENT, TAXATION AND TRANSFER OF TECHNOLOGY (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:78853

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