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  • June 2019
  • Article
  • IMF Economic Review

Financial Development and Technology Diffusion

By: Diego Comin and Ramana Nanda
  • Format:Print
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Abstract

We examine the extent to which financial market development impacts the diffusion of 16 major technologies, looking across 17 countries, from 1870 to 2000. We find that greater depth in financial markets leads to faster technology diffusion for more capital-intensive technologies but only in periods closer to the invention of the technology. In fact, we find no differential effect of financial depth on the diffusion of capital-intensive technologies in the late stages of diffusion or in late adopters. Our results are consistent with a view that local financial markets play a critical role in facilitating the process of experimentation that is required for the initial commercialization and diffusion of technologies.

Keywords

Technology Diffusion; Technology Adoption; Commercialization; Financial Markets

Citation

Comin, Diego, and Ramana Nanda. "Financial Development and Technology Diffusion." IMF Economic Review 67, no. 2 (June 2019): 395–419.
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About The Author

Ramana Nanda

Entrepreneurial Management
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More from the Authors
  • House Prices, Home Equity and Entrepreneurship: Evidence from U.S. Census Micro Data By: Sari Pekkala Kerr, William R. Kerr and Ramana Nanda
  • Are Transformational Ideas Harder to Fund? Resource Allocation to R&D Projects at a Global Pharmaceutical Firm By: Joshua Krieger and Ramana Nanda
  • Investment Committee Voting and the Financing of Innovation By: Andrey Malenko, Ramana Nanda, Matthew Rhodes-Kropf and Savitar Sundaresan
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