If Technology Has Arrived Everywhere, Why Has Income Diverged?

Abstract

We study the cross-country evolution of technology diffusion over the last two centuries. We document that adoption lags between poor and rich countries have converged, while the intensity of use of adopted technologies of poor countries relative to rich countries has diverged. The evolution of aggregate productivity implied by these trends in technology diffusion resembles the actual evolution of the world income distribution in the last two centuries. Cross-country differences in adoption lags account for a significant part of the cross-country income divergence in the nineteenth century. The divergence in intensity of use accounts for the divergence during the twentieth century. (JEL N10, N70, O14, O33, O41, O47)

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