Sources of technological divergence between developed and less developed countries
Raaj Kumar Sah and Joseph E. Stiglitz
In: Debt, stabilization and development, edited by Guillermo Calvo, Ronald Findlay, Pentti Kouri and Jorge B. de Macedo. Chapter 19, pages 423-446. Basil Blackwell, Oxford, UK, 1989.
(Post-publication note. This chapter does not include an abstract. The excerpts below are from the chapter.)
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Why is it that the growth rates and income levels of various countries have not converged faster than they have? Traditional neoclassical growth theory predicts that in the long run, the growth rates in all countries should be related only to the rate of technological progress and the rate of population growth; growth rates in per capita income should be related only to the rate of labor-augmenting technological progress, and differences in levels of per capita consumption should be related to differences in saving rates.
In this paper, we describe several different perspectives on the sources of non-convergence. Our emphasis is on one important aspect common to all of these perspectives, namely, that an economy can have multiple equilibria. That is, some societies may be characterized by high levels of innovation and others by low levels of innovation. One perspective is based on certain characteristics of technology. Some aspects of this approach have been pursued elsewhere. The other is based on socioeconomic considerations, and this paper will explore these.