Browsing by Subject "Development economics"

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    The development problem under embodiment
    (Wiley-Blackwell Publishing Ltd., 2006) Boucekkine, R.; Martínez, B.; Saglam, C.
    This paper studies technology adoption in an optimal growth model with embodied technical change. The economy consists of the final good sector, the capital sector, and the technology sector which role is the imitation of exogenous innovations. Scarce labor resources are allocated to the technology and final good sectors. The final good is allocated to consumption and to the capital sector. The authors analytically characterize the long run optimal allocations. Using a calibrated version of the model, they find that an acceleration in the rate of embodied technical change should not be responded by an immediate and strong adoption effort. Instead, adoption labor should decrease in the short run, and the optimal technological gap is shown to increase either in the short or in the long run. The state of the institutions and policies around the technology sector is key in the design of the optimal adoption timing. © 2006 The Authors; Journal compilation © 2006 Blackwell Publishing Ltd.
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    Does foreign direct investment promote growth? Exploring the role of financial markets on linkages
    (Elsevier BV, 2010) Alfaro, L.; Chanda, A.; Ozcan, S. K.; Sayek, S.
    Do multinational companies generate positive externalities for the host country? The evidence so far is mixed varying from beneficial to detrimental effects of foreign direct investment (FDI) on growth, with many studies that find no effect. In order to provide an explanation for this empirical ambiguity, we formalize a mechanism that emphasizes the role of local financial markets in enabling FDI to promote growth through backward linkages. Using realistic parameter values, we quantify the response of growth to FDI and show that an increase in the share of FDI leads to higher additional growth in financially developed economies relative to financially under-developed ones. © 2009 Elsevier B.V. All rights reserved.