Technology and Economic Prosperity


EDUARDO PORTER in The New York Times: “The impact of a technological innovation depends on how deeply it embeds itself in everything we do.
Earlier this month, a couple of economists at the Harvard Business School and the Toulouse School of Economics in France produced a paper asking “If Technology Has Arrived Everywhere, Why Has Income Diverged?” Economic prosperity, they noted, is ultimately driven by technological innovation. So if technologies today spread much more quickly than they used to from rich to poor countries, how come the income divide between rich and poor nations remains so large?
It took 119 years, on average, for the spindle to spread outside of Europe to the poorer reaches of the late-18th-century world, according to the authors. The Internet encircled the globe in seven. One might expect that this would have helped developing countries catch up with the richest nations at the frontier of technology
The reason that this did not happen, the authors propose, is that despite spreading faster, new technologies have not embedded themselves as deeply, measured by their prevalence, relative to the size of the economy. “The divergence in the degree of assimilation of technologies started about 100 years ago,” observed Diego Comin of Harvard Business School, one of the authors.”