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Optimizing international technology diffusion: A middle-income country's perspective

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  • Lin, Hwan C.

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.

Suggested Citation

  • Lin, Hwan C., 2010. "Optimizing international technology diffusion: A middle-income country's perspective," Economic Modelling, Elsevier, vol. 27(1), pages 54-66, January.
    • Handle: RePEc:eee:ecmode:v:27:y:2010:i:1:p:54-66
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    References listed on IDEAS

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    Cited by:

    1. Pfeiffer, Birte & Görg, Holger & Perez-Villar, Lucia, 2014. "The Heterogeneity of FDI in Sub-Saharan Africa – How Do the Horizontal Productivity Effects of Emerging Investors Differ from Those of Traditional Players?," GIGA Working Papers 262, GIGA German Institute of Global and Area Studies.

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