Abstract :
In amulti-industrygrowthmodel,firmsneedexternalfundsforproductivity-enhancing
R&D, andfacefinancingconstraints.Thecostofresearchdiffersacrossindustries,so
financingconstraintshinderindustryproductivitygrowthunevenly.Equilibrium
industrydynamicsmapintoadifferences-in-differencesregressionspecificationwhere
industrygrowthdependsontheinteractionbetweencountryfinancialdevelopment
and industryR&Dintensity.Thepaperprovidesaframeworkforinterpretingseveral
empiricalresultsthatrelyonindustrygrowthdataintermsofR&D-inducedtechnology
transfer,andidentifiesanewchannelforfinancetoencourageaggregategrowth:the
reallocationofresourcestowardssectorswithrapidlyexpandingtechnological
frontiers
