Drivers and Effects of Technology Adoption

National Bureau Of Economic Research Inc, Cambridge MA

Investigators

Abstract

The competitiveness of a country is to a large extent determined by the technology used in production by its companies. For example, recent concerns regarding the competitiveness of the United States can surely be traced to the technology used by American companies and to the fact that the technological advances of foreign competitors may have reduced, or even eliminated, the technological advantage American companies had a few decades ago. Even in advanced countries like the U.S., technology is mainly determined by the adoption decisions of companies. Understanding the drivers of technology adoption is therefore essential for designing and implementing policies that foster economic growth. Unfortunately, we still know relatively little about the technology adoption processes. This project will shed light on the drivers of technology as well as on how various dimensions of technology contribute to productivity growth. The research is divided in two parts. The first will deepen our understanding of the consequences of technology adoption by studying the role that technology adoption has played in the evolution of the cross-country distribution of per-capita income over the last 200 years. The second part of the project studies the determinants of technology adoption, focusing on on three types of factors pinpointed by the existing theoretical literature: financial market development, geographic distance to adoption leaders and political institutions. One significant drawback of the existing literature is that the relevance of these factors for technology is based almost entirely on anecdotal evidence. In contrast, this project will explore the generic importance of these factors by exploiting a comprehensive dataset, the CHAT dataset, that covers the diffusion of more than 100 technologies in over 150 countries during the last 200 years. Taken together, these two complementary lines of research will increase significantly our knowledge about the connection between technology and growth as well as about the fundamental determinants of technology. Broader Impacts: By developing new empirical approaches to use the CHAT dataset to study technology diffusion, this project will encourage researchers to consider additional factors that influence technology diffusion and use CHAT to evaluate them. Additionally, better understanding of the drivers of technology adoption will provide guidance in the formulation of adequate policies directed to enhancing the productivity and competitiveness of the U.S. economy. Last, but not least, the project will introduce both graduate and undergraduate student assistants to state of the art techniques and datasets that shall shape their training as economists.