Technology Adoption, Human Capital, and Growth Theory

The paper explores a model in which growth is determined by a combination of human capital and technology adoption. At the heart of the model is the notion of "contiguous knowledge"—the idea that knowledge spreads out a certain distance. Because of this property of knowledge, a country can adopt existing technology only when it is sufficiently close to the technological frontier. Unlike the neoclassical growth model, the proposed model predictions are pessimistic for countries that are far away from the frontier. The model is thus able to account both for rapid growth episodes and economic stagnation.