Openness, technology capital, and development
By: Ellen McGrattan, Edward C. Prescott.
Contributors: Prescott, Edward C.; National Bureau of Economic Research.
Series: NBER working paper series -- no. 13515.; Working paper series (National Bureau of Economic Research) -- working paper no. 13515.
Publisher: National Bureau of Economic Research
Published: 2007
Place of publication: Cambridge, Mass
Language: eng
Number of pages: 33
Subjects: Technology -- Economic aspects; Investments, Foreign; Economic development -- Econometric models
Description: 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. What distinguishes technology capital from other forms of capital is the fact that a firm can use it simultaneously in multiple domestic and foreign locations. Foreign technology capital is exploited by permitting foreign direct investment by multinationals. In both steady-state and transitional analyses, the extended growth model predicts large gains to being open.
Notes: "October 2007"

Includes bibliographical references (p. 33).

Also available in PDF from the NBER World Wide Web site (www.nber.org).