Technological Innovation and Divergence in Economic Growth

Abstract

The club convergence phenomenon among countries that occurred during the last half of the twentieth century and persists has been widely documented, and remains a main subject of study nowadays.¹ Despite early growth theories relying on the advantage of backwardness as a catching up mechanism, the expected convergence between different growth clubs of countries did not take place. The emphasis was then moved towards endogenous growth mechanisms,² educational systems,³ as well as, financial development and credit market imperfections.⁴ While recognizing the important role played by the financial sector in the technological development of countries,⁵ there is a concentration on endogenous growth mechanisms and human capital. In the first instance, the literature has advanced towards the recognition that the assimilation of the most advanced technological capital by less developed countries constitutes a growth mechanism that requires important amounts of both physical and human capital investment.⁶ Education, though an important factor for growth, has been displaced by differences in total factor productivity among countries, from which education is only partially responsible.⁷