Price penalty for poor countries

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Using trade data between 1978 and 2001, Harvard's Laura Alfaro and Faisal Ahmed derive unit prices for more than 1.2 million equipment goods from 154 countries, hoping to find evidence that capital goods in developing countries are more expensive.

In places like Malawi, where imports of capital goods constitute almost 100 percent of machinery and equipment, higher prices could explain the lack of technological diffusion from rich to poor countries.

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