Technology, Learning, and Long Run Economic Growth in Leading and Lagging Regions

This paper uses a dynamic model to study the effects of technology and learning on the long run economic growth rates of a leading and a lagging region. New technologies are developed in the leading region but technological improvements in the lagging region are the result of learning from the leading region's technologies. The analysis sheds light on four salient questions. First, the paper determines the long run growth rate of output per human capital unit in the leading region. Second, it defines a lagging to leading region technology ratio, studies its stability properties, and then uses this ratio to ascertain the long run growth rate of output per human capital unit in the lagging region. Third, for specific parameter values, it analyzes the ratio of output per human capital unit in the lagging region to output per human capital unit in the leading region when both regions have converged to their balanced growth paths. Finally, the paper discusses the policy implications of our analysis and then offers suggestions for extending the research described here