Posted by Ignacio on
Sat, 28/02/2009
As usual on Fridays, based on Raj Nallari and Breda Griffith's lecture notes.
Information and Communication Technology
Information and Communication Technology (ICT) is now the main technological driver for productivity growth in a number of developing countries. According to a study by the Centre for Economic Policy Research, a country which has reached a level of mobile phone penetration of 10 percent of the population adds 0.59 percent to its GDP per capita growth rate. Furthermore, strong empirical evidence suggests that investment in ICT improves competitiveness (see figure below). Investment in higher education is shown to strongly boosts competitiveness, partly through allowing better use of ICT. Hence, investments in human capital and ICT are key components of recent growth performance in several developing countries.
The Global Competitiveness Index
Posted by Ignacio on
Tue, 24/02/2009
The video recordings of the third and fourth discussions in this series are now available.
We have also created a new webpage for the Global Dialogues series, where you can access all the specific discussions and more background information on the Global Economic Crisis. We will be adding new sessions to that webpage as they take place, more or less monthly.
Posted by Ignacio on
Fri, 20/02/2009
Based on Raj Nallari and Breda Griffith's lecture notes.
Technology Diffusion and Adoption
Technology has helped economic and social progress since the industrial revolution. If technology is measured as total factor productivity, it explains much of the differences in both the level and rate of growth of income across countries (e.g. Hall and Jones 1999). However, if technology is defined as scientific innovation and invention it is almost exclusively an activity of richer countries, with many developing country nationals performing research in frontiers of science in high-income countries (e.g. a large proportion of NASA and Silicon Valley engineers are foreign born). Technological progress in rest of the world is achieved through the adoption and adaption of pre-existing but new technologies to firms and plant. For this diffusion to accelerate, openness to trade, foreign direct investment, and domestic investments in human capital is found to be critical. This discussion leads to the conclusion that technology is both a determinant of incomes and an outcome of rising incomes.
Older technologies, such as fixed-line telephone, electric power, transportation, and health care services is in high use in low and middle income developing countries, and these services are usually provided by governments because of the large initial investments needed, followed by high maintenance costs and need for high-skilled engineers. In contrast, newer technologies, such as internet, cell phones, computers etc are cheaper to adopt, easy to maintain and use. However, technological adoption is very uneven and this creates rural-urban gap as observed in India and most developing countries.
Posted by Ignacio on
Thu, 19/02/2009
Posted by Ignacio on
Tue, 17/02/2009
The second global dialogue of this series focused on the impact of the global crisis on the national macro economies and on the financial systems.
Experts from from Argentina, Uruguay, Turkey, Poland, Hungary, Russia, South Africa, Indonesia, Philippines, and South Korea participated in this event. Speakers included Professor Guillermo Calvo of Columbia University, and Dr. Gerard Caprio of Williams College.
Watch the discussion.
Posted by Ignacio on
Fri, 13/02/2009
As usual with our Fridays Academy, based on Raj Nallari and Breda Griffith's lecture notes.
Spending on Research and Development
Production function of each country may be different depending upon differences in diffusion of technology, infrastructure stock and human capital, and natural resource endowment. Theoretically, it is possible for a country to experience growth for a long period of time even if there is no technological progress merely by continuously accumulating physical and human capital. However, innovations are endogenous to firms and economy due to large spending on R & D (which maybe distorted by tax credits that encourage firms to classify current expenditures as investment) and variations in incentives facing innovators.
If technology is broadly defined as differences in productivity across countries, then this explains much of the disparities in per capital income across countries (De Long 1996). On the other hand, if technology is defined as most modern machinery and manufacturing processes, then this explains little of the differences in per capita income across countries. For example, Clark (1987) shows that during early twentieth century different textile mills across countries used the same machinery but there were large differences in output per hour. Similarly, why is Japan 47% more productive than USA in steel production but 67% less productive in food processing (McKinsey 1993).
Posted by Ignacio on
Wed, 11/02/2009
The World Bank Institute launched at the end of last year a global dialogue series geared towards policymakers, with the goal of facilitating real time cross-country discussion on the current global economic crisis.
The first videoconference focused on the impact of the financial crisis on state and local finance. Participants from Brazil, China, India and Russia contributed via satellite.
Watch the discussion.
Posted by Ignacio on
Tue, 10/02/2009
Posted by Ignacio on
Fri, 06/02/2009
This week we start a new series on "Understanding Growth and Poverty". In upcoming Fridays we will be looking at issues such as technology, urbanization, corruption and others, and at how they relate with growth and poverty. As usual, based on Raj Nallari and Breda Griffith's lecture notes.
Technology and Growth
Over six decades of empirical evidence, particularly from developing countries, indicate that total factor productivity (defined as output produced per worker or per unit cost or time) with increasing returns to technology is more important for competitiveness and growth than physical capital and human capital accumulation. However, the definition of technology varies in studies done so far, and economists are still unsure about which national policies and institutions enhance the efficiency of physical and human capital, and drive the accumulation of knowledge and use of new technologies. In this and upcoming posts we will focus on the key issue of whether the adoption of technology brings about income growth, employment and productivity. There is some evidence to suggest that physical capital is important at early stages of development (low income countries), human capital at middle income level, and new ideas and technological inventions and innovations for advanced countries. Does rapid technological change lead to job insecurity and job losses as a result of job skills becoming obsolete?
Posted by Ignacio on
Thu, 05/02/2009
The latest issue of the quarterly World Bank Research Digest includes a summary of past World Bank research papers that provide lessons relevant to the present situation; new papers written since September 2008; and projections for future economic growth across the world’s developing regions. New research covered in this issue attempts to answer broad questions such as the nature of fiscal responses that developing countries should make to the crisis and the implications of the meltdown for banking regulation. Other articles examine the types of measures that might help bail out the world’s poorest people, and whether the trade agenda should be broadened beyond the scope of the current Doha Round.
(via World Bank Research newsletter)
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