Friday, February 20, 2009

Friday's Academy

That's the title of a weekly feature at the World Bank's Poverty and Growth blog. Today's lesson is good for science and tech folks:
Technology has helped economic and social progress since the industrial revolution. If technology is measured as total factor productivity, it explains much of the differences in both the level and rate of growth of income across countries (e.g. Hall and Jones 1999). However, if technology is defined as scientific innovation and invention it is almost exclusively an activity of richer countries, with many developing country nationals performing research in frontiers of science in high-income countries (e.g. a large proportion of NASA and Silicon Valley engineers are foreign born). Technological progress in rest of the world is achieved through the adoption and adaption of pre-existing but new technologies to firms and plant. For this diffusion to accelerate, openness to trade, foreign direct investment, and domestic investments in human capital is found to be critical. This discussion leads to the conclusion that technology is both a determinant of incomes and an outcome of rising incomes.
Read the rest.

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