International Technology Diffusion

TLDR

Productivity differences across countries are largely driven by technology, and international diffusion—dominated by a few rich nations—determines the pace of global technical change and income convergence. The paper surveys what is known about the extent of international technology diffusion and the channels through which technology spreads. The authors review the literature on international technology diffusion and its mechanisms. The review finds that international diffusion is not inevitable or automatic; domestic technology investments are necessary for spread.

Abstract

This paper surveys what is known about the extent of international technology diffusion and channels through which technology spreads. Productivity differences explain much of the variation in incomes across countries, and technology plays a key role in determining productivity. The pattern of worldwide technical change is determined largely by international technology diffusion because a few rich countries account for most of the world's creation of new technology. Cross-country income convergence turns on whether technology diffusion is global or local. There is no indication that international diffusion is inevitable or automatic, but rather, domestic technology investments are necessary. Better understanding of what determines the effectiveness of technology diffusion sheds light on the pace at which the world's technology frontier may expand.