Transcript Technology in the developing world

Technology diffusion in the
developing world
Uri Dadush
Mick Riordan
World Bank
January, 2008
A broad definition of technology
 Includes the introduction of “new-to-the
market” and “new-to-the-firm” techniques
 Comprises:
–
–
–
–
machines
techniques (including business processes)
even market knowledge
seemingly simple technologies – such as
irrigation
Wide gaps persist in the use of many
technologies in 2004
Indexes, high-income countries=100
100
High-income
80
Upper-middle
60
Lowermiddle
40
20
Lowincome
0
Patents
Rural
sanitation
Tractors
Mobile
phones
Source: World Bank, Global Economic Prospects (2008)
Timely
delivery
Measured across several dimensions
1. Scientific innovation and invention

Patents, journal articles
2. Penetration of older technologies




Electrification
Fixed-line telephones
Sanitation
Immunizations
3. Penetration of newer technologies



Computers
Mobile telephones
Internet users
Mexico:
U-V
filtered
drinking
Laos:
Inexpensive
solar
power
India:
Internet-enabled
water
system
solutions
village
kiosk
Technology in the developing world
 The technology gap between rich and poor countries has
narrowed -- but remains large
 Progress in developing countries reflects the absorption of preexisting technologies – not at-the-frontier inventions
 Globalization has been a main driver of technological progress
 Low technical literacy, uneven distribution of older technologies
and low rural penetration rates limit absorptive capacity
 Persistent weakness in technological absorptive capacity may
constrain further technological progress
Technological progress is at the heart of income
growth and poverty reduction
Average annual per capita income and total factor productivity growth,1990-2005
8
Per capita income growth
7
6
TFP growth
5
4
3
2
1
0
East Asia &
Pacific
Europe &
Central Asia*
Latin America Middle-East &
& Caribbean
North Africa
* Data for Europe & Central Asia cover period 2005/1995
Source: World Bank, Poncet 2006
South Asia
Sub-Saharan
Africa
Technological progress in developing countries
has outpaced high-income countries
Percent change in technological achievement, 2000s vs 1990s
180
160
140
120
100
80
60
40
20
0
High Income
Source: World Bank
Upper Middle
Income
Lower Middle
Income
Low Income
Technology gap: narrowing but still wide
Index of technological achievement
120
1990s
100
2000s
80
60
40
20
0
High Income
Source: World Bank
Upper Middle
Income
Lower Middle
Income
Low Income
How the indexes were calculated

All data were scaled (divided by GDP, population or area as appropriate) to ensure comparability

Scaled data were averaged for each of two periods (1990-3 and 2000-3) to minimize impact of
outliers

All variables converted into an index bound between zero and one by applying subtracting from each
observation the minimum value observed over the two time periods and dividing by the difference
between the maximum and minimum
x
ij
 min( X )
max( X )  min( X )

Variables were converted to have same standard deviation and zero mean

Data set shown to have ywo or three principal components.

Data was segmented into economically sensible technology dimensions, each of which had one
associated principal component. Variables in each dimensions were aggregated using weights from
the principal components.

The four sub-indices were then aggregated using the first principal components of the reduced data
set.
Technology in the developing world
 The technology gap between rich and poor countries has
narrowed -- but remains large
 Progress in developing countries reflects the absorption of preexisting technologies – not at-the-frontier inventions
 Globalization has been a main driver of technological progress
 Low levels of human capital, uneven distribution of older
technologies and low rural penetration rates are important
weaknesses
 Persistent weakness in technological absorptive capacity may
constrain further technological progress
Developing countries are scarcely active at
the global technology frontier
Intensity of imported technologies summary index (2000s),
high-income countries=100
100
80
60
40
20
0
High-income
Upper-middleincome
Lower-middle
income
Source: World Bank, Global Economic Prospects (2008)
Low income
Increased penetration of older technologies
drives the rise in technological achievement in
developing countries
Increase in summary index, relative to high-income increase=100
600
500
400
300
200
100
0
Scientific innovation
High-income
Older technologies
Upper-middle
Lower-middle
Source: World Bank, Global Economic Prospects (2008)
Recent technologies
Low income
Technology in the developing world
 The technology gap between rich and poor countries has
narrowed -- but remains large
 Progress in developing countries reflects the absorption of preexisting technologies – not at-the-frontier inventions
 Globalization has been a main driver of technological progress
 Low levels of human capital, uneven distribution of older
technologies and low rural penetration rates are important
weaknesses
 Persistent weakness in technological absorptive capacity may
constrain further technological progress
Technology diffusion depends on exposure to
foreign technology and absorptive capacity
Source: World Bank, Global Economic Prospects (2008)
Substantial increases in market openness
have stimulated technology transfer
High-tech Imports (% of GDP)
FDI (% of GDP)
5
10
Upper-middle
8
Lower-middle
6
Upper-middle
4
4
Low income
2
3
Lower-middle
2
Low income
1
0
0
1994
1997
2000
2003
1990
1993
Source: CEPII, BACI database; World Development Indicators
1996
1999
2002
2005
Highly-skilled migrant populations facilitate
technology transfer
Developing country remittances
(% of GDP)
Size of diaspora
(% of origin-country population)
2.5
12%
10%
2
8%
1.5
6%
4%
1
2%
le
Source: www.worldbank.org/prospects/migrationandremittances.
Su
a
Af
ric
n
ar
a
bSa
h
ut
h
As
ia
a
So
Af
ric
an
Ea
st
ic
a
&
N
or
th
ib
be
C
ar
&
C
&
er
id
d
2005
M
2000
Am
1995
La
ti n
1990
ro
pe
Ea
0
Eu
st
A
si
a
&
en
t
Pa
ra
lA
ci
fi c
si
a
0%
0.5
Technology in the developing world
 The technology gap between rich and poor countries has
narrowed -- but remains large
 Progress in developing countries reflects the absorption of preexisting technologies – not at-the-frontier inventions
 Globalization has been a main driver of technological progress
 Low technical literacy, uneven distribution of older technologies
and low rural penetration rates limit absorptive capacity
 Persistent weakness in technological absorptive capacity may
constrain further technological progress
Most developing countries exploit recent
technologies at relatively low levels
% of developing countries using technology at indicated level of intensity
90
80
70
High-income countries
60
50
40
Developing countries
30
20
10
0
0-5
5-10 10-15 15-20 20-25 25-30 30-35 35-40 40-45 45-50
50+
Intensity of recent technology usage as a percent of global maximum
Source: World Bank using data from Comin & Hobihn (2004)
Low diffusion in rural areas restrains overall
technological achievement
Subscribers per 100 persons
60
50
Urban subscribers
40
30
20
Rural subscribers
10
0
1998
1999
2000
2001
2002
2003
2004
* 2007 data are for June 2007
Source: Telecommunications Regulatory Authority of India
2005
2006
2007*
Despite high enrolment rates, few students
pass standardized tests (2000s)
Sixth graders
Fourth graders
% of relevant
population
Enrolment
Meet standard
100
80
60
40
20
0
South
Africa
Uganda
Namibia
Malawi
Turkey
Sources: SACMEQ II (2000), PIRLS (2001), and DHS
Argentina Colombia Morocco
Technology in the developing world
 Progress in developing countries reflects the absorption of preexisting technologies – not at-the-frontier inventions
 The technology gap between rich and poor countries has
narrowed -- but remains large
 Globalization has been a main driver of technological progress
 Low technical literacy, uneven distribution of older technologies
and low rural penetration rates limit absorptive capacity
 Persistent weakness in technological absorptive capacity may
constrain further technological progress
Progress in absorptive capacity
Substantial improvements
1. Macroeconomic environment
2. Financial structure and intermediation
Relatively weak improvements
1. Basic and advanced technological literacy
2. Regulatory environment and governance
Technological absorptive capacity has
improved relatively slowly
Percent increase in technological achievement and absorptive capacity, 1990s to 2000s
10
9.5
9
8.5
8
Absorptive capacity
High income
Upper-middle income
Lower-middle
Source: World Bank, Global Economic Prospects (2008)
Low-income
Technology converges toward a level determined
by absorptive capacity not the global frontier
 By early 1990s endogenous growth theory (Barro, 1991;
Casselli et al., 1996) sought to explain lack of income
convergence by arguing that domestic institutions (e.g.
education, competition policy, regulations etc.) determined
the level of income to which countries converged
 Hall and Jones (1998), Frankel and Romer (1999)
Acemoglu, Easterly and Leine 2003, Rodrik et al. 2002)
provided empirical support.
 Same basic logic has been applied to technology Lederman
& Saenz (2005)
5
4
3
2
1
0
Weak Absorptive capacity may begin to
constrain further technological progress
Technological achievement versus per capita income by region (early 2000s)
0.2
0.18
All countries
0.16
0.14
0.12
0.1
0.08
0.06
0.04
0.02
0
0
5000
10000
East Asia & Pacific
Middle East & North Africa
High income OECD
Log. (All)
15000
20000
25000
30000
Europe & Central Asia
South Asia
High income Other
Source: World Bank, Global Economic Prospects (2008)
35000
40000
Latin America & Caribbean
Sub-Saharan Africa
All
Weak Absorptive capacity may begin to
constrain further technological progress
Technological achievement versus per capita income by region (early 2000s)
0.2
0.18
Europe & Central Asia
0.16
All countries
0.14
0.12
0.1
0.08
0.06
0.04
0.02
0
0
5000
10000
East Asia & Pacific
Middle East & North Africa
High income OECD
Log. (All)
15000
20000
25000
Europe & Central Asia
South Asia
High income Other
Log. (Europe & Central Asia)
30000
Source: World Bank, Global Economic Prospects (2008)
35000
40000
Latin America & Caribbean
Sub-Saharan Africa
All
Weak Absorptive capacity may begin to
constrain further technological progress
Technological achievement versus per capita income by region (early 2000s)
0.2
0.18
Europe & Central Asia
0.16
All countries
0.14
0.12
0.1
0.08
Latin America & Caribbean
0.06
0.04
0.02
0
0
5000
10000
East Asia & Pacific
Middle East & North Africa
High income OECD
Log. (All)
15000
20000
25000
Europe & Central Asia
South Asia
High income Other
Log. (Latin America & Caribbean)
30000
35000
40000
Latin America & Caribbean
Sub-Saharan Africa
All
Log. (Europe & Central Asia)
Source: World Bank, Global Economic Prospects (2008)
Key features of a pro-technology policy stance
 No detailed roadmap for promoting technological progress, but
certain policy directions are indicated:
– Maintain openness to trade, foreign direct investment and
participation of diaspora
– Further improve the investment climate so as to allow
innovative firms to grow and flourish
– Improve basic infrastructure (roads, electricity, telephony)
– Raise the quality and quantity of education throughout economy
not just major centers
– Emphasize technology diffusion by reinforcing dissemination
systems and the market-orientation of R&D programs
Technology diffusion in the
developing world
Hans Timmer
Andrew Burns
World Bank
January, 2008