Imported machinery and growth in LDCs

This paper finds evidence in favor of the claim that imported machinery leads to higher growth in developing countries, Using panel data, we find that investment in domestically produced equipment reduces the growth rate while investment in imported equipment increases it, The advantage of this study over the paper of Lee [Journal of Development Economics, 48 (1) (1995) 91] is that since we make a distinction between imported and domestically produced equipment, we are able to distinguish our hypothesis from the DeLong and Summers hypothesis chat equipment investment in general contributes more to growth. (C) 2001 Elsevier Science B.V. All rights reserved.