Optimizing international technology diffusion: A middle-income country's perspective |
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Authors: | Hwan C Lin |
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Institution: | Department of Economics, University of North Carolina at Charlotte, 9201, University City Blvd., Charlotte, NC 28223, United States |
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Abstract: | The paper develops a North–Middle–South model to formulate a middle economy that plays catch-up via imitative R&D to acquire newer technologies from a higher-wage innovative forerunner, while playing “reverse catch-up” via outbound FDI to transfer older technologies to a lower-wage follower. A critical policy dilemma facing the middle economy is how to balance its R&D-driven technology inflows against its FDI-driven technology outflows. Numerical simulations are used for dynamic welfare analysis. This paper finds that tightening FDI permits the middle economy to keep a lower saving rate without weakening its ability to acquire newer technologies in the long run. |
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Keywords: | F13 O3 |
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