Distance, technologies, and institutions

Recent work on how technologies such as computers spread across countries has found that a country's productivity benefit derived from foreign technologies tends to fall off sharply if the source of the technology is far away. The effect is possibly due to lower trade or movement of people between distant countries compared with closer countries. Here is one paper finding such results. They depend on how much a country is able to absorb technology, for example whether it has a suitably educated workforce. The findings and their interpretations are still in development and there is uncertainty about them at the moment.

I suggested in a recent post that institutions could be considered as technologies based on people. The analogy raises the question of whether institutions have a similar spread over distance. Some of the diffusion mechanisms are the same and hence may display the same decline with distance. The distance effect on institutional diffusion is suggested by recent tendencies in democratisation after communism (Eastern Europe being most liberalised with decreasing liberalisation towards Asia), in conflict (spilling out of Rwanda, Uganda, and Sudan and into neighbouring countries), and in religion (with countries furthest from the Arabian Peninsula having less politicised religion).