DP229 | Fixed Investment and the Technology Gap in the UK

Publication Date

01/03/1988

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Abstract

United Kingdom investment is explained in terms of the international diffusion of technology, where the United States is assumed to be a technological leader and the United Kingdom a technological laggard. The gap between United Kingdom and United States capital-labor ratios is decomposed into four components: an adjustment gap, an information gap, an appropriate technology gap and a resistance gap. The factors that might influence the gap are hypothesized and it is found that the model gives a reasonable account of business investment since 1960.