Topic of Book
Using data from 15 technologies in 166 countries over the last two centuries, the authors seek a high-level understanding of how technology diffuses within societies and between societies.
- It takes a long time for technologies to fully diffuse through societies. The average is 45 years, though the duration varies greatly.
- Richer countries adopt technology faster than poor countries. This lag increases international equality.
- Poor countries that radically increase their adoption rate can become rich within a generation. Japan, South Korea, Hong Kong, Singapore and Taiwan are five recent examples.
- Poor countries that do not increase their adoption rate fall further behind. The Middle East is a recent example.
Important Quotes from Book
We obtain three key findings.
The first is that adoption lags are large, 45 years on average, and vary a lot. The standard deviation is 39 years. Most of this variation is due to technology-specific variation, which contributes more than half of the variance of adoption lags in our sample. Over the two centuries for which we have data the average adoption lag across countries for new technologies has steadily declined.
Richer countries adopt technology faster than poorer countries, but the poorer countries are catching up in their adoption rate. The constant flow of innovation creates inequality because of the adoption lag, but it is reducing over time.
The second finding is that the growth “miracles” of Japan and the East Asian Tigers, though more than half a century apart, both coincided with a reduction of the technology adoption lags in these countries relative to those in their OECD counterparts.
Japan before 1867 had an adoption lag comparable to Latin America leading to real per capita GDP at 42 percent of OECD average. After 1867, adoption rate accelerates quickly leading to a catchup to 56 percent of OECD average. For technologies invented in the 20th Century, Japan’s adoption rate is higher than OECD and comparable to USA.
East Asian Tigers (Hong Kong, South Korea, Taiwan and Singapore) showed a similar transformation. For technologies invented before 1950, their adoption rates were similar to Sub-Saharan Africa and lower than Latin America. For technologies invented since 1950, adoption rates are faster than OECD countries.
Third, when we use our model to quantify the implications of the country-specific variation in adoption lags for cross-country per capita income differentials, we find that differences in technology adoption account for at least a quarter of per capita income disparities in our sample of countries.