The paper by Parente and Prescott (1994) proposes a theory of economic development that focuses on technology adoption and the barriers to such adoption. The authors argue that these barriers, which can take various forms such as regulatory constraints, bribes, violence, or worker strikes, increase the cost of adopting new technologies. They suggest that differences in these barriers account for the significant disparity in income levels across countries and that reductions in these barriers can lead to rapid development, or "development miracles." The model is calibrated to U.S. balanced growth observations and the postwar Japanese development experience. The authors find that the calibrated model is consistent with both the observed income disparity and the rapid development of Japan and other countries. They also interpret the postwar recoveries of France and West Germany, and the development miracles of South Korea and Taiwan, in terms of changes in the relative technology adoption barriers. The paper emphasizes that the theory is about relative income levels rather than growth rates. It shows that the cross-country distribution of per capita income shifts up over time, consistent with the observed development experiences. The authors conclude that a large unmeasured investment in the business sector, which they interpret as technology adoption investment, is crucial for economic development. They suggest that greater trade openness could contribute to development by weakening resistance to technology adoption.The paper by Parente and Prescott (1994) proposes a theory of economic development that focuses on technology adoption and the barriers to such adoption. The authors argue that these barriers, which can take various forms such as regulatory constraints, bribes, violence, or worker strikes, increase the cost of adopting new technologies. They suggest that differences in these barriers account for the significant disparity in income levels across countries and that reductions in these barriers can lead to rapid development, or "development miracles." The model is calibrated to U.S. balanced growth observations and the postwar Japanese development experience. The authors find that the calibrated model is consistent with both the observed income disparity and the rapid development of Japan and other countries. They also interpret the postwar recoveries of France and West Germany, and the development miracles of South Korea and Taiwan, in terms of changes in the relative technology adoption barriers. The paper emphasizes that the theory is about relative income levels rather than growth rates. It shows that the cross-country distribution of per capita income shifts up over time, consistent with the observed development experiences. The authors conclude that a large unmeasured investment in the business sector, which they interpret as technology adoption investment, is crucial for economic development. They suggest that greater trade openness could contribute to development by weakening resistance to technology adoption.