The World Bank has issued its latest edition of Global Economic Prospects. This, 2008 edition focuses on technology diffusion to the developing world.
Summary: "Technological progress in developing countries between the 1990s and 2000s has been very strong, outpacing that in developed countries by 40 to 60 percent, according to a World Bank report, Global Economic Prospects 2008: Technology Diffusion in the Developing World. But the gap between rich and poor countries is still very wide."
The report was also the basis for a long article in The Economist of February 7, 2008.
COMMENT
I suspect that this indicator does not really work. Lets think about technology and development for a bit.
Scandinavian nations are not at the technology frontier for growing mango and papaya, nor are they heavy users of madical techniques for the treatment of tropical diseases; Equatorial countries don't utilize a lot of techniques for treatment of frostbite, nor is their technology for heating very strong. Obviously technology transfer is of concern for economic development only where that technology can be usefully utilized in the recipient country.
More to the point, the technology that a country needs depends on the industries that it operates. There are only a few nations in the world that have industries building commercial jet aircraft. Similarly, we see few nations with large scale silicon chip factories, manufacturers of railroad equipment, etc. Ethical pharmaceutical development and manufacture too is an industry concentrated in a few developed nations. An index that focused on the technologies in these industries would find very little transfer to developing nations, and practically none to Sub-Saharan Africa.
There is of course a considerable literature on "high technology exports". This makes sense, but runs into the problem that new technologies are continuously being invented, and older technologies are being mastered in new countries and the related productive activities transferred to them. It seems to me that the division between "developed nations" and "less developed nations" is useful, even though some newly industrialized nations are making the transition between the two states. I think the developed nations tend to have and continue to develop high technology industries, and the World Bank report perhaps obscures this phenomenon.
The issue for developing, and indeed all countries, is whether they are using the best technology to serve their needs.
It is well known that worker productivity is enhanced through appropriate capital investment. Buying a worker appropriate machinery with which to work can greatly increase productivity. Providing a farmer with irrigation and leveled land can similarly increase the productivity of his labor, as can providing him with working capital to purchase improved seed and chemical inputs.
It is for that reason that economists use changes of total factor productivity as an indicator of technological progress. While capital investment usually involves changes in technique, it is useful to distinguish the economic progress that comes primarily from increasing capital per worker, and that which comes from working smarter.
It seems to me, however, that it may be more useful to open the black box, and use expert judgment to measure the quality of technology in use in developing nations. Is the poor farmer using seed that embodies the best genetic potential for his needs? Does he have the best machinery he can afford? Does he have chemical inputs that are appropriate to his needs and resources, at the times he needs them? Is the agricultural research system developing the new varieties and practices that the farmer needs in a timely fashion, and are the extension and other institutions making them available in a timely fashion?
One could make a similar example for health technologies. Does the patient get the best treatment and medication that he can afford? Is the medical system innovating appropriately and in a timely fashion? Are the health service practioners updating their techniques appropriately and in a timely fashion. Does the health education system help families to learn about new hygiene and public health interventions?
There is a concept of a technological frontier. The frontier marks the best that the society knows how to do with available resources. We are concerned with both how far actual productive enterprises are from that technological frontier, and whether the frontier is advancing sufficiently rapidly. We can conceptualize producers simultaneously:
- increasing productivity through new capital investment;
- moving closer to the technological frontier through increasing mastery of available technologies,
- advancing the technological frontier through innovation. and
- moving into new productive enterprises that offer new and more beneficial ways of employing resources.
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