An Exploration of Technology Diffusion
Executive Summary — How long are technology adoption lags? Can cross-country differences in technology adoption lags account for a significant fraction of cross-country GDP disparities? Diego Comin of Harvard Business School and Bart Hobijn of the Federal Reserve Bank of New York develop a new benchmark to understand the diffusion process of individual technologies and the consequences that this has for aggregate growth. This benchmark provides a rationale for the evolution of diffusion measures that include how many units of technology each adopter has adopted in addition to the traditional extensive margin. The model is estimated to obtain measures of adoption lags for 15 technologies in 166 countries. Key concepts include:
- Adoption lags are large. On average, countries have adopted technologies 47 years after their invention.
- There is substantial variation across technologies and countries.
- Over the past two centuries, newer technologies have been adopted faster than old ones.
- The remarkable development records of Japan between 1870 and 1970 and of the so-called East Asian Tigers in the second half of the 20th century all coincided with a catch-up in the range of technologies used with respect to industrialized countries.
- Adoption lags account for at least 25 percent of cross-country per capita income differences.
We develop a model that, at the aggregate level, is similar to the one sector neoclassical growth model, while, at the disaggregate level, has implications for the path of observable measures of technology adoption. We estimate our model using data on the diffusion of 15 technologies in 166 countries over the last two centuries. We evaluate the implications of our estimates for aggregate TFP and per capita income. Our results reveal that, on average, countries have adopted technologies 47 years after their invention. There is substantial variation across technologies and countries. Over the past two centuries, newer technologies have been adopted faster than old ones. The cross-country variation in the adoption of technologies accounts for at least a quarter of per capita income differences.