Delays in Technology Adoption, Appropriate Human Capital, Natural Resources and Growth

36 Pages Posted: 8 Sep 2003

See all articles by Byniamin Berdugo

Byniamin Berdugo

Hebrew University of Jerusalem - Department of Statistics

Jacques Sadik

Hebrew University of Jerusalem

Nathan Sussman

Graduate Institute Geneva, Centre for Finance and Development

Date Written: July 2003

Abstract

This paper analyzes the link between natural resources abundance, the quality of learning institutions and retardation in technology adoption. We offer a model in which human capital is technology specific and that learning to master the technology is costly. Market failure in the human capital market causes an underinvestment in human capital that leads to our most important result that small differences in natural resources endowments can bring about delays in technology adoption and persistent income per capita differences. We analyze the dynamics of convergence by follower countries and show it exhibits very fast growth initially and thereafter convergence to the growth rate of leader. We show that differences in the quality of learning institutions may account for persistent differences in the level of income per capita, and may be an important source of leapfrogging. We include endogenous population growth and show that technology adoption is consistent with a demographic transition. Our results are consistent with the historical record and show that resource rich countries were overtaken by poor resource countries - reversal of fortune. Unlike current emphasis on legal systems, constitutions and property rights, we highlight the importance of efficient and high quality school system and openness to foreign technologies and knowledge as factors that shorten the adoption delay. This enables us to account for the rapid growth exhibited by countries that lack common institutional features of the Anglo-Saxon tradition. We suggest a straight forward policy recommendation that calls on governments to allow free flow of knowledge and to invest in good school and training systems.

Keywords: Natural resources, appropriate human capital, technology adoption, growth

JEL Classification: O0, O3, O4, N1

Suggested Citation

Berdugo, Byniamin and Sadik, Jacques and Sussman, Nathan, Delays in Technology Adoption, Appropriate Human Capital, Natural Resources and Growth (July 2003). Available at SSRN: https://ssrn.com/abstract=428142 or http://dx.doi.org/10.2139/ssrn.428142

Byniamin Berdugo

Hebrew University of Jerusalem - Department of Statistics ( email )

Mount Scopus
Jerusalem, 91904
Israel

Jacques Sadik

Hebrew University of Jerusalem ( email )

Mount Scopus
Jerusalem 91905, Jerusalem 91905
Israel

Nathan Sussman (Contact Author)

Graduate Institute Geneva, Centre for Finance and Development ( email )

Switzerland

HOME PAGE: http://https://graduateinstitute.ch/academic-departments/faculty/nathan-sussman

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