Historical Technology Adoption in a Neoclassical Model
Even though recent evidence suggests that productivity differences between countries account for the bulk of cross-country differences in per capita income levels and that a large part of these productivity differences are due to countries using different technologies, there is no formal theoretical framework that aims to reconcile the evidence on cross-country per capita income differences with the evidence on cross country differences in technology adoption. In this paper we introduce a basic theoretical framework that allows us to do so. We match this theoretical framework to data on historical cross-country technology adoption patterns and use it to estimate what part of observe cross-country productivity differences can be explained by the different rates at which countries have adopted major technologies
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