The paper provides a reconciliation of Lucas' paradox, based on fixed setup costs of new investments. With such costs, it does not pay a firm to make a small' investment, even though such an investment is called for by marginal productivity conditions. Using a sample of 45 developed and...

The paper reviews the crucial role which globalization forces played in Israel's transformation from low tech to high tech economy. Special emphasis is placed on foreign direct investment as a driver for the high-tech transformation