PICTURE
THIS
Bridging the
T
echnological
progress—improvements
in
Author:
Picture This — Chart
1
the
ways
that
goods
and
services
are
produced,
Date: 3/19/08
and brought to market—is at the very
proof: marketed,
1
heart of human advancement and development.
It has helped reduce the share of people living in absolute
poverty in developing countries from 29 percent in 1990
to 18 percent in 2004.
Technological progress in developing countries (that is,
Author: Picture This — Chart 2
low-income, lower-middle-income, and upper-middleDate:countries)
4/2/08 outstripped progress in high-income
income
proof:
1
countries between
the early 1990s and 2000s. Of course,
the initial level of technology in lower-income countries
was much lower to begin with.
Technological progress has gone hand in hand
with income growth in developing regions.
In low-income countries, technological progress has
been very rapid . . .
(average annual percent change, 1990–2005)
(percent change in technological achievement index, 2000s versus 1990s)1
8
7
6
5
4
3
2
1
0
180
160
140
120
100
80
60
40
20
0
Per capita income growth
Total factor productivity growth1
East Asia Europe and Latin America Middle East and South Asia Sub-Saharan
and Pacific Central Asia2 and Caribbean North Africa
Africa
1
Total factor productivity growth summarizes all influences on GDP growth—such as
technology—other than increases in capital and labor.
2
Data for Europe and Central Asia cover the period 1995–2005.
Author: Picture This — Chart 3
Date: 4/2/08
proof: 1the technology gap between rich and poor
As a result,
1
High-income
countries
Upper-middleincome countries
Lower-middleincome countries
Low-income
countries
Aggregate measure that combines 20 separate indicators of technological achievement.
Author: Picture This — Chart 4
countries has narrowed, although it remains wide. Lowincome countries employ only one-fourth the technology
used in high-income countries.
The very strong technological progress developing counDate: 3/19/08
tries have enjoyed has come mainly from adopting and
proof:existing
1
absorbing
technologies. Compared with the size of
their economies, they perform relatively little new-to-theworld innovation.
. . . but the technology gap between high-income
and low-income countries remains wide.
Most low-income countries are barely active on the
global technology frontier.
(technological achievement index)1
(intensity of scientific innovation and invention during 1990–2005;
index, high-income countries = 100)1
0.18
0.16
0.14
0.12
0.10
0.08
0.06
0.04
0.02
0
1
1990s
2000s
100
80
60
40
20
High-income
countries
Upper-middleincome countries
Lower-middleincome countries
Low-income
countries
Aggregate measure that combines 20 separate indicators of technological achievement.
0
1
High-income
countries
Upper-middleincome countries
Lower-middleincome countries
A subindex of the technological achievement index.
Prepared by Andrew Burns (World Bank). Based on World Bank, Global Economic Prospects 2008.
44 Finance & Development June 2008
Low-income
countries
Technology Divide
Author: Picture This — Chart 5
The
diffusion
of technology across developing countries has
Date:
4/3/08
been facilitated by their increased exposure to foreign techproof: 1
nologies. Over the past 15 years, foreign direct investment
levels and imports of high-technology and capital goods have
doubled as a percent of GDP—in part because of contacts
with well-educated migrant populations living abroad.
Market openness stimulates technology transfer.
8
6
5
Upper-middleincome countries
4
ome
iddle-inc
Lower-m untries
co
100
Upper-middleincome countries
60
40
2
Low-income countries
2
1
0
1994 96
0
1990
98 2000 02
04
93
96
99
(number of phone service subscribers in India per 100 people)
60
Urban subscribers
40
30
20
Rural subscribers
0
1998 99 2000 01
1
02
03
Data for 2007 reflect levels as of June 2007.
04
05
06
2002
0
05
1800s
1900–50
1950–75
1975–2000
Note: X-axis denotes period technology was invented.
Although better macroeconomic and educational policies, as well as
the spread of older enabling technologies—such as electrical networks,
road infrastructure, telephone land lines, and sanitation networks—have
advanced the spread of technology in developing countries, progress
has been slow and the capacity to absorb new ideas and techniques
remains weak.
Closing the gap
Low diffusion in rural areas in many
countries, such as India, restrains
technological achievement.
10
20
Low-income countries
Slow diffusion within countries means that,
Author: Picture This — Chart 7
although individual cities may be technology
Date:the
3/19/08
leaders,
use of technology in a country as
proof:
1 be low. For instance, while more
a whole may
than 1 in 2 urban Indian families has cell phone
access, only 1 in 10 in the rural sector does.
50
Years for technology to reach country
Percent of countries to reach 25 percent
penetration threshold
80
Lower-middleincome countries
3
4
much more quickly. In the early 1900s, new technology took
more than 50 years to reach most countries; today it takes
about 16 years. But technology tends to spread slowly within
countries because many developing countries lack the technical skills necessary to master new, or even older, technologies.
Technological diffusion across countries has picked
up, but penetration within countries is weak.
(foreign direct investment,
percent of GDP)
(imports of high-tech goods,
percent of GDP)
10
Author: Picture This — Chart 6
Date:
3/19/08
Partly
as a result
of this increased exposure, newer technology—
suchproof:
as cell 1phones, computers, and the Internet—now spreads
071
To continue catching up with high-income countries, developing
countries need to
• maintain exposure to foreign technologies through trade openness, foreign direct investment, and the participation of migrant
populations;
• further improve the investment climate to allow innovative firms
to grow;
• invest in enabling technologies and basic infrastructure, such as
roads, electricity, and telephones;
• improve the quality and increase the quantity of education
throughout the economy—not just in major centers; and
• emphasize technology diffusion by reinforcing dissemination systems and the market orientation of R&D programs. n
Finance & Development June 2008 45