Prague Economic Papers 2015, 24(4):452-472 | DOI: 10.18267/j.pep.547

Directed Technical Change, Technology Adoption and the Resource Curse Hypothesis

George Adu
Department of Economics, Kwame Nkrumah University of Science and Technology, Kumasi, Ghana (gadu.cass@knust.edu.gh).

This paper analyses the effect of asymmetry in factor endowments between resourcerich and resource-poor countries on equilibrium bias of technology development and adoption possibilities. First, we show that the bias in equilibrium technology in the resource-poor North is determined by its relative abundance of human capital and physical capital. Secondly, we show that the equilibrium bias in technology in the resource-abundant South is dependent positively (negatively) on the relative abundance (scarcity) of skilled (unskilled) labour and the relative abundance (scarcity) of physical (natural) capital in the North. This force is dampened by the relative scarcity of skilled labour and physical capital in the South. These forces drive wage inequality, high cost of capital and skill technology mismatch in the South, all of which are bad for growth. These effects cumulatively explain part of the observed differences in growth performance between resource-rich and resource-poor countries.

Keywords: human capital, directed technical change, directed technology adoption, natural capital, physical capital, North, South
JEL classification: O31, O33, O41, Q33

Published: January 1, 2015  Show citation

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Adu, G. (2015). Directed Technical Change, Technology Adoption and the Resource Curse Hypothesis. Prague Economic Papers, 24(4), 452-472. doi: 10.18267/j.pep.547
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