Discussion paper

DP229 Fixed Investment and the Technology Gap in the UK

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.


Beenstock, M and C Whitbread (1988), ‘DP229 Fixed Investment and the Technology Gap in the UK‘, CEPR Discussion Paper No. 229. CEPR Press, Paris & London. https://cepr.org/publications/dp229