Technological and social factors in development: A fresh look at the evidence'

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Technological and social factors in development
A fresh look at the evidence.

• Jan Fagerberg and Martin Srholec
• Centre for Technology, Innovation and Culture
  (TIK)
• University of Oslo
• jan.fagerberg_at_tik.uio.no
• WIID, Aalborg university, May 4-5, 2009

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Technology gaps and development gaps

• How difficult is it to close the gap?
• Easy ? Veblen (1912) about Germany machine
  technology makes catch-up no laborious or
  uncertain matter catch-up is easy!
• Easy? Public good approach, neoclassical growth
  theory (Solow 1956)
• Evidence Not so easy
• Why? Technological and social factors

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The role of social factors

• Gerschenkron (1952) about Germany Cumulative
  technology and inertia makes catch-up difficult!
  New institutional instruments and targeting
  required!
• Adelman and Morris (1965) economic
  performance conditioned by the social and
  political setting
• Perez (1983) Socio-economic paradigms
• Abramovitz (1986) social capabilties
• Putnam (1993) social capital

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Both technological and social factors matter
(Freeman and Louca)

• Technological capability ( absorptive capacity )
  ability to make effective use of technological
  knowledge in efforts to assimilate, use, adapt
  and change existing technologies (Kim)
• Social capability (Abramovitz) education,
  finance, governance culture (honesty and trust)
• Social capital or cohesion (Putnam, Woolcock)
  (culturally embedded)ability for socially
  beneficial collective action (across different
  social, regligious, ethnic etc. groups)
• Other possible factors Economic structure,
  political system, history, geography and nature .

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Measuring capabilities

• Technological capability (Science, patenting,
  RD, standards ICTs)
• Education (literacy, secondarytertiary
  schooling, life expectancy)
• Finance ( credit, stock market, interest rate
  spread, nonperforming loans)
• Innovation friendly governance (days needed to
  set up a firm, IPRs, laworder, corruption )
• Social cohesion (trust, tolerance, civic
  enagement)
• Have a look?

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Technological capability and GDP per capita
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Education and GDP per capita
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Financial system and GDP per capita
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innovation friendly governance and GDP per
capita
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Social cohesion and GDP per capita
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GDP per capita and western-type political
system, 2000-2004
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GDP per capita and openness to trade/FDI
(orthogonal to size), 2000-2004
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Technological and social capabilities correlate
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Conclusions

• Successful catch-up depends on interaction
  between technological and social capabilities (as
  Freeman and Louca argue)
• Social capabilites such as a well developed
  financial and educational system matter
• Innovation friendly governance (business
  regulation) important (and more important than
  type of political system)
• And so is social cohesion A person excluded is a
  the loss of a potential entrepreneur, countries
  that discriminate because of gender, race,
  religion or sexual preference less likely to
  catch up .