Some Properties of the Technology Gap between Leading and Lagging Regions

Abstract

We theoretically analyze some properties of the technology gap between leading and lagging regions studied recently by Batabyal and Nijkamp [1]. New technologies are developed in the leading region. The lagging region does not conduct research and development (R & D) but uses the leading region's technology with a temporal gap of τ > 0 time periods. We first use a model with a single factor of production, human capital, to study the relationship between the technology gap τ and the difference in the growth rates of output per human capital unit in the leading and in the lagging region. Next, we introduce a second factor of production, physical capital, and use a variant of the Solow growth model to shed light on two issues. We show that despite the existence of the technology gap, on the balanced growth path (BGP), the physical to effective human capital ratio is identical in both regions. Finally, we demonstrate that introducing a second factor of production does not alter the relationship between the technology gap τ and the difference in the growth rates of output per human capital unit in the two regions.