Knowledge, Capabilities and the Poverty Trap: The Complex Interplay Between Technological, Social and Geographical Factors

ICER Working Paper No. 24/2009

Posted: 21 Dec 2009

See all articles by Jan Fagerberg

Jan Fagerberg

University of Oslo - TIK - Senteret

Martin Srholec

University of Oslo - Centre for Technology, Innovation and Culture

Date Written: December 21, 2009

Abstract

This paper explores the possibility that technological capabilities, to lead to development, need to be accompanied by a broader set of “social capabilities”, reflecting not only the quality of governance but also the spread of values, beliefs and institutions that encourage members of society to actively contribute to the development process. To investigate this issue, a set of empirical indicators, reflecting the capabilities that have been emphazised in the literature as being important for development, was identified. We also take into account the possibility that these capabilities (and their impact) may be conditioned by historically given factors (related to, for example, geography, demography and history). The paper uses factor analysis to analyse the question of how these indicators interrelate and explores their relationship with economic development. We find that technological and social capabilities are indeed strongly related and, moreover, strongly correlated with economic development. The same does not apply for the second factor suggested by the analysis, which mainly reflects the character of countries’ political systems. Thus it is more important economically what countries do than how they decide on it. A strong negative relationship with development was found for the third factor, reflecting the combined effect of high fertility rates, low education and high frequency of serious disease. Arguably, this contributes to a “vicious circle” that makes it difficult for some very poor countries, especially in the tropics, to escape from poverty.

Suggested Citation

Fagerberg, Jan and Srholec, Martin, Knowledge, Capabilities and the Poverty Trap: The Complex Interplay Between Technological, Social and Geographical Factors (December 21, 2009). ICER Working Paper No. 24/2009 , Available at SSRN: https://ssrn.com/abstract=1526506

Jan Fagerberg (Contact Author)

University of Oslo - TIK - Senteret ( email )

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Norway
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22858984 (Fax)

Martin Srholec

University of Oslo - Centre for Technology, Innovation and Culture ( email )

Oslo
Norway

HOME PAGE: http://www.tik.uio.no

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