Sources of Technological Divergence between Developed and Less Developed Economies

Abstract

Developed and less developed countries differ in numerous ways. Incomes per head are different, capital stocks are different, the levels of education of their citizens differ. Whether a cause or consequence of these differences, some of the most salient differences are related to technological change and innovation. Firms in many developed countries appear to be constantly looking around for new technologies, for better and more efficient ways of doing things; firms in the newly industrialized countries (NICs) and those LDCs aspiring to become NICs appear to be searching among available technologies for those which will most improve their productivity, while firms in the less successful LDCs are often slow to abandon the traditional ways of doing things. Though exceptions to this polar characterization can be found, the fact remains that the technological gap between many poorer LDCs and the developed countries has not significantly narrowed over the past 50 years.

JEL Classification: 11