Openness, technology capital, and development

Ellen R. McGrattan, Edward Prescott

Research output: Contribution to journalArticle

48 Citations (Scopus)

Abstract

In this paper, we extend the growth model to include firm-specific technology capital and use it to assess the gains from opening to foreign direct investment. A firm's technology capital is its unique know-how from investing in research and development, brands, and organization capital. Technology capital is distinguished from other forms of capital in that a firm can use it simultaneously in multiple domestic and foreign locations. A country can exploit foreign technology capital by permitting direct investment by foreign multinationals. In both steady-state and transitional analyses, the extended growth model predicts large gains to being open.

Original languageEnglish (US)
Pages (from-to)2454-2476
Number of pages23
JournalJournal of Economic Theory
Volume144
Issue number6
DOIs
StatePublished - Nov 2009

Fingerprint

Openness
Growth model
Investing
Direct investment
Multinationals
Foreign direct investment

Keywords

  • Foreign direct investment
  • Openness

ASJC Scopus subject areas

  • Economics and Econometrics

Cite this

Openness, technology capital, and development. / McGrattan, Ellen R.; Prescott, Edward.

In: Journal of Economic Theory, Vol. 144, No. 6, 11.2009, p. 2454-2476.

Research output: Contribution to journalArticle

McGrattan, Ellen R. ; Prescott, Edward. / Openness, technology capital, and development. In: Journal of Economic Theory. 2009 ; Vol. 144, No. 6. pp. 2454-2476.
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