We discuss a unified theory of directed technological change and technology
adoption that can shed light on the causes of persistent productivity differences
across countries. In our model, new technologies are designed in advanced countries and diffuse endogenously to less developed countries. Our framework is rich
enough to highlight three broad reasons for productivity differences: inappropriate
technologies, policy-induced barriers to technology adoption, and within-country
misallocations ...
We discuss a unified theory of directed technological change and technology
adoption that can shed light on the causes of persistent productivity differences
across countries. In our model, new technologies are designed in advanced countries and diffuse endogenously to less developed countries. Our framework is rich
enough to highlight three broad reasons for productivity differences: inappropriate
technologies, policy-induced barriers to technology adoption, and within-country
misallocations across sectors due to policy distortions. We also discuss the effects
of two aspects of globalization, trade in goods and migration, on the wealth of
nations through their impact on the direction of technical progress. By doing so,
we illustrate some of the equalizing and unequalizing forces of globalization.
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