Over the past two hundred years, poor countries have become faster at adopting the technologies of rich countries. So why is it, the economist asks, that poor countries have remained poor, by and large? The answer, Diego Comin says, is that poor countries use technologies less intensely: fewer people use less advanced computers less often. To find out why – finance, institutions, geography? – Diego amasses data to measure the diffusion of technologies over two centuries. Compiling a big data set to study the drivers of technology adoption – this is new economic thinking.
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Comments
The premise that the use of technology = country richness is wrong. Country richness to a great extent = how workers are paid. If their pay systems are based on the passing on to them of productivity gains, whether these gains come from technology,new resource discoveries, or some other factor, the country will get richer. If not, it won't. Take America as an example. Technology has been skyrocketing here, but wages have been stagnant for more than ten years, and the country is getting poorer. The key is productivity increase sharing and not the increased use of technology. In economics today too much time, energy, and effort is directed to these kinds of macro theories and too little to micro realities, such as the ones explained in my book The Smackdown of the American Worker that I recently sent to the Institute.
Great video. Do you know the title of the paper where he explores the two types of technology adoption?
I wonder if such a long time frame (200 years) inadvertently does not obfuscate what has been happening in emerging markets in the last 3 decades or so when I have been commuting between North America and those markets on "hands-on" advisory gigs on transformations. For example, the rate of diffusion or penetration of cell phones in postcommunist countries of Eurasia has been faster and more intensive than in North America in the 1990s. True, there still is a gap in per capita GDP but technology induced total factor productivity rises only very slowly. Similar but a bit less potent observations I have from my work in Africa; and those notorious financial institutions do help there to spread the tech (phones, handhelds) via promotion of new payment methods and therefore new micro credits and micro businessess, esp. women activities. This would point to the possibility of rapidly rising diffusion intensity, not the other way around.
Best wishes,
Val Samonis
Toronto
The very particular word 'poor country' is not acceptable - poor in what, with this kind of loan on the shoulder of this so called richest country in the world should lead us to think more deeply before we brand some country as "poor country" - this kind of vague studies do not help the humankind.
It overlaps with another idea, which is that 'deregulated' financial systems are characterised by tendencies to develop bubbles, which results in a social animal that tends to head off down certain paths, utilising specific technology in a determined and intense way for the duration of the bubble.
Bubbles are all-consuming, demanding that societies en-masse shift direction. This results in complete changes of infrastructure, and finally collapses. The dotcom bubble resulted in the internet, while the pre-depression bubble resulted in tarmac roads and automobiles.
Although there is nothing special about roads and otto-cycle engines, compared to bicycle, horse, or even feet, it is inconceivable to humans at the moment that we should deliver things in any other way. (Until of course the next bubble puts us on electric bicycles or whatever.)
These bubbles are the result of excess liquidity. That kind of liquidity is only available under certain monetary conditions. Particularly, the USA's Fed and its printing press privilege, though not exclusively. The intensity of adoption of technology, is dependent on the availability of such credit to fuel things in a self-reinforcing cycle of speculation and growth in one particular technical direction.
The so called rich countries are dependent on such aimless blunders to help justify their malfunctioning financial system. Once the tech binge stops though, the rich countries stop being rich, and suddenly they are faced with a population that has automated its raison d'etre away.
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