No. 2/2005
PRODUCTIVITY GROWTH IN BACKWARD ECONOMIES AND THE
ROLE OF BARRIERS TO TECHNOLOGY ADOPTION
Hildegunn Ekroll Stokke
Abstract:
We offer a barrier model of growth with a broader understanding of
the sources of productivity growth. Organizational change is suggested
as an alternative to innovation and technology adoption. Domestic and
international barriers (related to the level of human capital and the
trade share) determine the timing and pace of technological catch-up,
and as opposed to the catchingup hypothesis backward economies may get
stuck in a poverty trap. Growth in lagging economies is not driven by
adoption of foreign technology due to inappropriateness. The large technological
distance forces the economy to rely more on own productivity improvements
through organizational change. Trade liberalization in backward economies
does not give the expected boost to productivity growth, because of low
capability to take advantage of the frontier technology. Economies can
escape the poverty trap by reducing trade barriers, but the benefits from
an open economy is highest in middle-income economies, which have both
the potential and capability to adopt foreign technology.
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