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Technology Differences, Institutions and Economic Growth: a Conditional Conditional Convergence

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Herve Boulhol

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Abstract

Highlighting that technology is only a component of productivity, this study focuses on the interactions between institutions and technology differences to explain cross-country growth pattern. Three complementary channels through which institutions impact growth are identified: efficiency in the use of technology, long term TFP-growth and technology diffusion. From a new and detailed database on institutions developed by the French Ministry of Economy, Finance and Industry, poor institutional quality, beyond human capital, is estimated to be the source of an annual growth-rate loss of between 2.4 and 6.1 percentage point for half of the countries. Technology diffusion speed is institutionally related and the distance to the technology frontier is reduced from 0% to 12.4% annually depending on the country. Trade has a non linear influence on growth, being significant only for countries already advanced in the development phase. Conditional convergence here is also conditional to sharing the same technology and quality of institutions, rendering recent observed divergence well accounted for.

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Paper provided by CEPII research center in its series Working Papers with number 2004-02.

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Date of creation: Feb 2004
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Handle: RePEc:cii:cepidt:2004-02

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Related research
Keywords: technology transfers; macroeconomics; international comparison; international integration; convergence; technology diffusion; institutions; productivity; growth;

Find related papers by JEL classification:
O11 - Economic Development, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
O33 - Economic Development, Technological Change, and Growth - - Technological Change - - - Technological Change: Choices and Consequences; Diffusion Processes
O47 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Measurement of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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References listed on IDEAS
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Desierto, D., 2005. "The Co-evolution of Institutions and Technology," Cambridge Working Papers in Economics 0558, Faculty of Economics, University of Cambridge. [Downloadable!]
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