Technology gaps, transfers, and narrowing

One of my pet theories is that technology is a leading driver of economic growth. At the moment it remains a pet because there is not a vast amount of published evidence on its effect.

I've been running some preliminary studies on the interactions between technology gaps (measured by things like the number of telephones per person in a technological leader minus the figure in a developing country), transfers (measured by things like foreign direct investment per person to a country), and changes in the gaps. One might think that a high gap might lead to increased transfers and quicker narrowing, with slowing over time. That would be a classical interpretation, with an alternative interpretation belonging to endogenous theory where a leader in technology can pull away from followers.

There are issues about who is the leader, and what measures of gap and transfer to use. For example, if there is a really technologically advanced country, but it has few people in it then its contribution to world technology might be less than a large but on average less technologically advanced country. In my preliminary work, I used the US as a leader because it is big and advanced, although the problem is not avoided. Examining correlations between the various variables gave some interesting propositions, notably on the relative performances of Sub-Saharan Africa and South East Asia.

For the overall data (Penn World Table, plus UN sourced data mostly), a large gap relative to the US seems to result in lower transfers and changes. However, the negative correlations are lower for changes than transfers, suggesting technology catch-up may be less hindered by poverty than trade is. This may help to explain why countries which have a reputation for high valuation of knowledge seem to have high growth. Whether it is the transfers which is responsible for the catch-up is open for discussion.

For a restricted subset of the data, a large gap from the US for eg computers or internet tends to be associated with higher changes in SE Asia and Southern and Eastern Europe, but the opposite in SSA. However the large gap seems to result in a decrease in FDI and imports of technological items (like precision engineering tools) almost as strong in SE Asia as in Africa. The correlation is also negative in S and E Europe, but less strong.

All regions have positive correlations between income and imports of dictionaries and encyclopaedias, but the correlation is less strong in SE Asia than in other regions, ie low income does not seem to lower this form of knowledge transfer to the same extent there as elsewhere.

All regions have positive correlations between students sent to the UK and Australia and the dictionary/encyclopaedia trade, but it is less strong in SE Asia than in other regions. Possibly if a country in SE Asia is less engaged with the international community through person exchanges, it does not prevent acceptance of their knowledge to the same extent that it does elsewhere.