Question

please use exact same symbol/letter as in textbook for all variable and parameter. Please do not copy answer from existed question because i need more detail explanation and clear steps please thank you.

128 Chapter 5 The Solow Growth Model Technology transfer in the Solow model: One explanation for China's rapid economic growth during the past several decades is its expansion of policies that encourage "technology transfer." By this, we mean policies such as opening up to international trade and attracting multinational corporations through various incentives that encourage the use and adoption in China of new ideas and new technologies. This question asks you to use the Solow model to study this scenario. Suppose China begins in steady state. To keep the problem simple, let's assume the sole result of these technology transfer policies is to increase A by a large and permanent amount, one time. Answer the following questions: (a) Analyze this change using a Solow diagram. What happens to the econ- omy over time? (b) Draw a graph showing what happens to output in China over time. What happens to output per person in China in the long run? (C) Draw a graph showing what happens to the growth rate of output in China over time. Explain. (d) Discuss in a couple of sentences what your results imply about the effect of technology transfer on economic growth.

Answer 1

In the state diagram head -4, Alfl - Jo= Aofik & an+d) k A f(K) -* -syl e diagram, initial steady rake equilibrium occurs at mill will 1. Technology transfer shift the output upwards curve to Yg = and corresponding to this, i wings curive shifts upwards I1 = A f(k) and at neu theady state equilibrium both capital and output per capita has increased in the economy. nag F---- Output Output per Capital to her head head of - Time The diagrams shows that output in china has increased and Output per person has also increased As the above graph depicts c the granth rate in a china has increased ď from n l population granth rate) to nego where t is rate of technological progress. d) Technology transfer increased growth rate in the because economy it improves the level of productivity in the economy and makes an economy more efficient.