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Old Dominion University

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Economic development

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The Choice Of Technology In Economic Development, Lei Wen, Haiwen Zhou Jan 2023

The Choice Of Technology In Economic Development, Lei Wen, Haiwen Zhou

Economics Faculty Publications

The impact of capital accumulation on job creation is an important and interesting issue in economic development. This model provides a general-equilibrium framework for studying technology choice with unemployment in a developing economy based on micro-foundations. Unemployment in the urban sector results from the existence of efficiency wages. Manufacturing firms engage in oligopolistic competition and choose technologies to maximise profits. A more advanced technology uses more capital and less labour. In the steady state, an increase in the amount of capital induces firms to choose more advanced technologies and the wage rate increases. While a higher capital stock always induces …


A Dynamic Model Of The Choice Of Technology In Economic Development, Haiwen Zhou, Ruhai Zhou Jan 2016

A Dynamic Model Of The Choice Of Technology In Economic Development, Haiwen Zhou, Ruhai Zhou

Economics Faculty Publications

In this overlapping-generations model, there is unemployment in the manufacturing sector. Manufacturing firms engage in oligopolistic competition and choose technologies to maximize profits. With capital as a fixed cost of production, increasing returns in the manufacturing sector exist. In the unique steady state, first, when individuals become more patient, the savings rate increases while the level of an individual’s income decreases. Second, an increase in population or percentage of income spent on manufactured goods does not change steady-state technology while the level of an individual’s income decreases. Third, an increase in the wage rate leads manufacturing firms to choose more …


The Choice Of Technology And Rural-Urban Migration In Economic Development, Haiwen Zhou Jan 2013

The Choice Of Technology And Rural-Urban Migration In Economic Development, Haiwen Zhou

Economics Faculty Publications

This paper studies a general equilibrium model of rural-urban migration in which manufacturing firms engage in oligopolistic competition and choose increasing returns technologies to maximize profits. Urban residents incur commuting costs to work in the Central Business District. Surprisingly a change in the size of the population or an increase in the exogenously given wage rate will not affect a manufacturing firm’s choice of technology. This helps to explain why firms in developing countries may not adopt labor intensive technologies even under abundant labor supply. An increase in the number of manufacturing firms increases both the employment rate and the …