Barriers to Technology Adoption and Development

TLDR

Barriers to technology adoption vary across countries and over time, and larger barriers require greater firm investment to adopt advanced technology. The study proposes a theory of economic development centered on technology adoption and its barriers. The model is calibrated to U.S. balanced growth data and the postwar Japanese development miracle.

Abstract

We propose a theory of economic development in which technology adoption and barriers to such adoptions are the focus. The size of these barriers differs across countries and time. The larger these barriers, the greater the investment a firm must make to adopt a more advanced technology. The model is calibrated to the U.S. balanced growth observations and the postwar Japanese development miracle. For this calibrated structure we find that the disparity in technology adoption barriers needed to account for the huge observed income disparity across countries is not implausibly large.