Working Paper: NBER ID: w18091
Authors: Jess Benhabib; Jesse Perla; Christopher Tonetti
Abstract: Will fast growing emerging economies sustain rapid growth rates until they "catch-up" to the technology frontier? Are there incentives for some developed countries to free-ride off of innovators and optimally "fallback" relative to the frontier? This paper models agents growing as a result of investments in innovation and imitation. Imitation facilitates technology diffusion, with the productivity of imitation modeled by a catch-up function that increases with distance to the frontier. The resulting equilibrium is an endogenous segmentation between innovators and imitators, where imitating agents optimally choose to "catch-up" or "fall-back" to a productivity ratio below the frontier.
Keywords: Innovation; Imitation; Technology Diffusion; Economic Growth
JEL Codes: O14; O30; O31; O33; O40
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| productivity ratio (E23) | investment type (G11) |
| distance to frontier (O57) | marginal productivity of imitation (L15) |
| imitation (Y60) | productivity growth (O49) |
| catchup function (C29) | productivity growth (O49) |
| high relative productivity (O49) | fallback choice (Y20) |