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Do Poor Countries Really Need More IT?

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  • Maya Eden
  • Paul Gaggl

Abstract

Productivity differences across countries are often attributed to differences in technological capabilities. This paper asks whether there are systematic cross-country differences in the adoption of information technologies (IT). We document a positive correlation between IT use and income, which weakens over time. However, given that IT use is an endogenous outcome of both technological capabilities and the abundance of complementary factors of production, it tends to over-state the degree of cross-country differences in technology. We propose two novel calibration approaches to address this problem. After accounting for endogenous differences in industrial composition, we find that there is no systematic relationship between income and IT capabilities.

Suggested Citation

  • Maya Eden & Paul Gaggl, 2020. "Do Poor Countries Really Need More IT?," The World Bank Economic Review, World Bank, vol. 34(1), pages 48-62.
    • Handle: RePEc:oup:wbecrv:v:34:y:2020:i:1:p:48-62.
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    File URL: http://hdl.handle.net/10.1093/wber/lhy022
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    References listed on IDEAS

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    1. Maya Eden & Paul Gaggl, 2018. "On the Welfare Implications of Automation," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 29, pages 15-43, July.
    2. Paul Gaggl & Greg C. Wright, 2017. "A Short-Run View of What Computers Do: Evidence from a UK Tax Incentive," American Economic Journal: Applied Economics, American Economic Association, vol. 9(3), pages 262-294, July.
    3. Mary O'Mahony & Marcel P. Timmer, 2009. "Output, Input and Productivity Measures at the Industry Level: The EU KLEMS Database," Economic Journal, Royal Economic Society, vol. 119(538), pages 374-403, June.
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    Citations

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    Cited by:

    1. Piotr Lewandowski & Albert Park & Simone Schotte, 2020. "The global distribution of routine and non-routine work," IBS Working Papers 06/2020, Instytut Badan Strukturalnych.
    2. Lewandowski, Piotr & Keister, Roma & Hardy, Wojciech & Górka, Szymon, 2020. "Ageing of routine jobs in Europe," Economic Systems, Elsevier, vol. 44(4).
    3. Finkelstein Shapiro, Alan & Mandelman, Federico S., 2021. "Digital adoption, automation, and labor markets in developing countries," Journal of Development Economics, Elsevier, vol. 151(C).
    4. Maya Eden & Paul Gaggl, 2018. "On the Welfare Implications of Automation," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 29, pages 15-43, July.
    5. Rica, Sara De La & Gortazar, Lucas & Lewandowski, Piotr, 2020. "Job Tasks and Wages in Developed Countries: Evidence from PIAAC," Labour Economics, Elsevier, vol. 65(C).
    6. Piotr Lewandowski & Albert Park & Wojciech Hardy & Yang Du & Saier Wu, 2022. "Technology, Skills, and Globalization: Explaining International Differences in Routine and Nonroutine Work Using Survey Data," The World Bank Economic Review, World Bank, vol. 36(3), pages 687-708.
    7. Marta Palczynska, 2018. "Wage premia for skills: The complementarity of cognitive and non-cognitive skills," IBS Working Papers 09/2018, Instytut Badan Strukturalnych.
    8. Sayema Haque Bidisha & Tanveer Mahmood & Mahir A. Rahman, 2021. "Earnings inequality and the changing nature of work: Evidence from Labour Force Survey data of Bangladesh," WIDER Working Paper Series wp-2021-7, World Institute for Development Economic Research (UNU-WIDER).
    9. Piotr Lewandowski, 2018. "How does technology change the nature of work? Poland vs. the EU," IBS Policy Papers 02/2018, Instytut Badan Strukturalnych.

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