Dynamic Analysis of Imitation and Technology Gap

Abstract

This paper investigates how imitation activities affect the technology gap between developing and developed countries using a North-South model in which the variety of goods is expanding over time. If imitation productivity is high enough, nonrivalrous ideas and inexpensive labor enables developing countries to reduce their technological backwardness by imitating products even if their initial level of technology is far behind the technology in developed countries. We also show that the rise of imitation productivity may benefit both developing and developed countries if they prefer a sufficient variety of goods.