Publication: Technology and Development: Stylized Facts and Policy Directions
Abstract
The adoption of technologies from abroad is a necessary component of rapid and sustained growth in developing countries, enabling them to catch up with the more advanced economies. The speed at which technology is adopted depends essentially on a country's own efforts--there are few external impediments to the spread of most technologies. Contributing outright "new to the world" innovations is unlikely to be an important part of this process for developing countries, though creative adaptation of preexisting technologies can be necessary and valuable. Thus, much of the technology gap relates not to new technologies but to older technologies and the failure to spread them widely within developing countries. Newer technologies are spreading increasingly rapidly, partly because they generally require less infrastructure investment and because government involvement is facilitating quicker access to disadvantaged regions within countries. A sound development strategy should include a concerted effort to import technology and be based on three pillars. The first two pillars are openness and absorptive capacity (education, investment climate) and are essential pursuits on their own merits. The third pillar is more controversial and involves direct intervention to deal with market failures that impede technology diffusion. Success in this difficult area depends on the quality of execution as well as on the design of policies, and avoiding their capture by special interests. Many developing countries have demonstrated that they can catch-up rapidly, and yet the technology frontier continues to push outward and the gap between the developing and industrial countries remains significant--pointing to their still largely untapped potential.
Link to Data Set
Digital Object Identifier
Associated content
Other publications in this report series
Journal
Journal Volume
Journal Issue
Collections
Related items
Showing items related by metadata.
Publication It's Not Factor Accumulation : Stylized Facts and Growth Models(Washington, DC: World Bank, 2001-05)The article documents five stylized facts of economic growth: (1) the 'residual' (total factor productivity, tfp) rather than factor accumulation accounts for most of the income and growth differences across countries; (2) income diverges over the long run; (3) factor accumulation is persistent while growth is not, and the growth path of countries exhibits remarkable variation; (4) economic activity is highly concentrated, with all factors of production flowing to the richest areas; and (5) national policies are closely associated with long-run economic growth rates. These facts do not support models with diminishing returns, constant returns to scale, some fixed factor of production, or an emphasis on factor accumulation. However, empirical work does not yet decisively distinguish among the different theoretical conceptions of tfp growth. Economists should devote more effort toward modeling and quantifying tfp.Publication North-South and South-South Trade-Related Technology Diffusion: How Important Are They in Improving TFP Growth?(2008)This paper examines the impact on total factor productivity (TFP) growth in the South of North-South and South-South trade-related technology diffusion and of foreign direct investment (FDI). North-South and South-South trade-related research and development (R&D) stocks are constructed based on industry-specific R&D in the North, North-South and South-South trade patterns, and input-output relations in the South. The main findings are: 1. both North-South and South-South trade-related R&D have a positive impact on TFP growth in the South; 2. FDI has a positive, though smaller, impact on TFP growth; and 3.the impact on TFP growth of trade-related technology diffusion increases with the level of education in the case of North-South trade but not in the case of South-South trade.Publication Biofuels, Poverty, and Growth: A Computable General Equilibrium Analysis of Mozambique(2010)This paper assesses the implications of large-scale investments in biofuels for growth and income distribution. We find that biofuels investment enhances growth and poverty reduction despite some displacement of food crops by biofuels. Overall, the biofuel investment trajectory analyzed increases Mozambique's annual economic growth by 0.6 percentage points and reduces the incidence of poverty by about 6 percentage points over a 12-year phase-in period. Benefits depend on production technology. An outgrower approach to producing biofuels is more pro-poor, due to the greater use of unskilled labor and accrual of land rents to smallholders, compared with the more capital-intensive plantation approach. Moreover, the benefits of outgrower schemes are enhanced if they result in technology spillovers to other crops. These results should not be taken as a green light for unrestrained biofuels development. Rather, they indicate that a carefully designed and managed biofuels policy holds the potential for substantial gains.Publication Economic Growth in Latin America and the Caribbean : Stylized Facts, Explanations, and Forecasts(Washington, DC: World Bank, 2005)Economic Growth in Latin America and the Caribbean analyzes whether economic reforms have been beneficial to growth in the region. In doing so, it recognizes that growth is driven by a variety of factors - in some cases poor growth is due to insufficient structural reforms (e.g., low trade openness), in others to inappropriate stabilization policies (e.g., exchange rate overvaluation), and still in others to negative international conditions (e.g., growth slowdown in industrial countries). It is obvious but still correct to say that identifying the problem is the first step towards the solution. This book contributes to this effort by examining the growth performance of countries in Latin America and the Caribbean, explaining the underlying sources of their economic growth, and designing a strategy for further growth.Publication Openness Can Be Good for Growth : The Role of Policy Complementarities(World Bank, Washington, DC, 2005-11)The authors study how the effect of trade openness on economic growth depends on complementary reforms that help a country take advantage of international competition. This issue is illustrated with a simple Harris-Todaro model where output gains after trade liberalization depend on the degree of labor market flexibility. In that model, trade protection may ameliorate the problem of underemployment (and underproduction) in sectors affected by labor market distortions. Hence, trade liberalization unambiguously increases per capita income only when labor markets are sufficiently flexible. The authors then present some panel evidence on how the growth effect of openness depends on a variety of structural characteristics. For this purpose, they use a non-linear growth regression specification that interacts a proxy of trade openness with proxies of educational investment, financial depth, inflation stabilization, public infrastructure, governance, labor-market flexibility, ease of firm entry, and ease of firm exit. They find that the growth effects of openness are positive and economically significant if certain complementary reforms are undertaken.
Users also downloaded
Showing related downloaded files
No results found.