Monday 25 August 2008

Technological transfer's growth effects split by size of gap

For the model in my last post, a gap from the United States in per capita telephone ownership tends to increase economic growth. This is an average result for all countries combined.

If we look at countries split according to whether they have a small, medium, or large gap from the United States, there is a fuller picture. Low gap countries see little positive growth impact from each extra telephone in the gap. Medium gap countries see a very large positive impact from each extra telephone. Large gap countries see a negative impact from each extra telephone in the gap, but the effects are not significant. Perhaps a country requires some technological development in order to take advantage of gaps, for example by transferring technology from abroad.

I am not sure whether the effects are capturing improvements in growth (if the telephones measure greater efficiency increasing growth) or shifts in growth (if the change in technology lowers the growth of countries which are not technologically connected). A bit of both, probably.

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