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INNOVATION, IMITATION AND ENTREPRENEURSHIP
GRACE LI ANN YONG
Centre for Research in Pedagogy and Practice, National Institute of Education, 1 Nanyang Walk,
Singapore 637616
lagyong@nie.edu.sg
KONG WENG HO
Division of Economics, Nanyang Technological University, Nanyang Avenue,
Singapore 639798
kwho@ntu.edu.sg
Date: June 2006
This paper analyzes the gradual shift in the technological paradigm of an economy as it approaches
the world technology frontier. The model developed in this paper consists of firms which employ
skilled workers as an important input in technological advancement, but the novel feature here is
the entrepreneur, who is the brain of technological progress. The entrepreneur has to decide to
undertake either imitative or innovative activities, of which decision both affects and is affected by
the country's distance to frontier. Specifically, the entrepreneur needs to have a minimum ability
threshold level in order to carry out innovation. This endogenous threshold level falls as the
economy moves closer to the technological frontier, enabling more entrepreneurs to be engaged in
an innovation-based strategy, and consequently, moving the economy from a technological
structure that is based on imitation of foreign technologies to one where domestic innovation
dominates. The transitional dynamics of the model shows that there exists a steady state distance
from the world frontier that countries will eventually converge to. We also find that it is possible
for countries under certain conditions, to be trapped in a regime carrying out only imitation of
world technologies.
Keywords: Technology diffusion; innovation; entrepreneurship; growth
1
1. Introduction
1.1. Technology trajectory
A recently published book entitled ‘Imitation to Innovation' traces how Korea's
technological paradigm has evolved from accumulating and assimilation of foreign
technologies into an advanced industrialized country with indigenous technological...