DP9466 If Technology Has Arrived Everywhere, Why Has Income Diverged?

Author(s): Diego Comin, Martí Mestieri
Publication Date: May 2013
Keyword(s): great divergence, technology diffusion, transitional dynamics
JEL(s): E13, O14, O33, O41
Programme Areas: International Macroeconomics, Development Economics, Economic History
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=9466

We study the lags with which new technologies are adopted across countries, and their long-run penetration rates once they are adopted. Using data from the last two centuries, we document two new facts: there has been convergence in adoption lags between rich and poor countries, while there has been divergence in penetration rates. Using a model of adoption and growth, we show that these changes in the pattern of technology diffusion account for 80% of the Great Income Divergence between rich and poor countries since 1820.