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 language | English (US) |
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Pages (from-to) | 2454-2476 |
Number of pages | 23 |
Journal | Journal of Economic Theory |
Volume | 144 |
Issue number | 6 |
DOIs | |
State | Published - Nov 2009 |
Keywords
- Foreign direct investment
- Openness
ASJC Scopus subject areas
- Economics and Econometrics