Publication

This paper analyzes a stylized model of international capital mobility and diffusion of embodied technologies from north to south. It reconciles the view that technological catching up is stronger, the larger the technology gap, with the alternative view that technological catching up is strongest at a medium technology gap. The author argues that the closer the south is to the technology frontier, the more beneficial is a higher income share of foreign capital. The speed of technology diffusion is higher in small economic regions with high population densities.