Consider the model of innovation and technology diffusion with two countries:
a) Analyze graphically the effect of a reduction in the proportion of labour employed in the research sector in the follower country on the technology ratio and on the rate of technological progress in the follower country at the new steady-state. Explain briefly.
b) Represent graphically the evolution of production per worker in the follower country during the transition towards the new steady-state. Explain briefly.
c) What will be the impact of this change for the cost of imitation, or technology adoption, in the follower country. Explain briefly.