If Technology Has Arrived Everywhere, Why has Income Diverged?

Diego A. Comin, Martí Mestieri Ferrer

NBER Working Paper No. 19010
Issued in May 2013
NBER Program(s):   DAE   EFG   ME   PR 

We study the lags with which new technologies are adopted across countries, and their long-run penetration rates once they are adopted. Using data from the last two centuries, we document two new facts: there has been convergence in adoption lags between rich and poor countries, while there has been divergence in penetration rates. Using a model of adoption and growth, we show that these changes in the pattern of technology diffusion account for 80% of the Great Income Divergence between rich and poor countries since 1820.

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