BARRIERS TO TECHNOLOGY ADOPTION AND DEVELOPMENT

We propose a theory of economic development in which technology adopti on and barriers to such adoptions are the focus. The size of these bar riers differs across countries and time. The larger these barriers, th e greater the investment a firm must make to adopt a more advanced tec hnology. The model is calibrated to the U.S. balanced growth observati ons and the postwar Japanese development miracle. For this calibrated structure we find that the disparity in technology adoption barriers n eeded to account for the huge observed income disparity across countri es is not implausibly large.