Technological Transfers, Limited Commitment and Growth

No 248, Computing in Economics and Finance 2006 from Society for Computational Economics

Abstract: This paper examines the effect on economic growth and welfare of the access to external financing which results in technological transfers to a developing country from the rest of the world. We consider a two-sector stochastic growth model and compute optimal accumulation mechanisms in the environments which differ in the extent to which the borrowing contracts are enforced. Furthermore, we examine different assumptions concerning the default punishment and their implications for growth, welfare and borrowing patterns. We show that under limited commitment lack of technological transfers may result in scarce capital flows to developing countries and substantially reduce their growth opportunities. Presence of technological transfers in this environment induces a developing country to use foreign capital to both smooth consumption and invest more heavily in all the sectors of the economy including those unaffected by the productivity benefits. Our findings suggest that technological transfers may play a role of an important enforcement mechanism. In addition, our model can account for the rich structure of observed capital flows to low- and middle income countries

Keywords: Incentive compatibility; technological diffusion; international capital flows; default risk; numerical algorithm. (search for similar items in EconPapers)
JEL-codes: C63 F34 O33 (search for similar items in EconPapers)
Date: 2006-07-04
New Economics Papers: this item is included in nep-dev, nep-fmk and nep-ino
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://repec.org/sce2006/up.1449.1140919402.pdf (application/pdf)

Related works:
Working Paper: Technological Transfers, Limited Commitment and Growth (2008)
Working Paper: Technological Transfers, Limited Commitment and Growth (2008)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:sce:scecfa:248

Access Statistics for this paper

More papers in Computing in Economics and Finance 2006 from Society for Computational Economics Contact information at EDIRC.
Bibliographic data for series maintained by Christopher F. Baum ().