Digital Transformation

The spatial diffusion of technology

Diffusion of thecnolgy and per capita income


Technology disparities are critical for explaining cross-country differences in per capita income. Despite being non-rival in nature and involving no direct transport costs, technology diffuses slowly both across and within countries. Even when a technology has arrived in a country, it takes years and even decades before it has diffused to the point of having a significant impact on productivity. Why does technology diffuse slowly? How do we explain cross-country differences in its speed of diffusion? In this paper, the authors study the diffusion over time and space of 20 major technologies in 161 countries over the last 140 years. The spatial effects they identify for technologies vanish over time. For most technologies, this implies that the effect of geography is initially strong, decays over time, and eventually disappears. This is the first paper to document these patterns in adoption rates for a large number of technologies and countries. Estimates provided of structural parameters can be used to inform spatial theories of growth.

Key concepts include:

  • This paper uses a new data set of direct measures of technology to study technology diffusion across time and space.
  • Technology diffuses slower to locations that are farther away from adoption leaders.
  • Interactions are more frequent for more recent technologies.
  • Understanding technology diffusion over space is crucial to understand the speed of technology diffusion.
  • Evidence on the significance of the spatial and temporal links in technology adoption could prove helpful to stimulate future research in these areas.

Read more at The Spatial Diffusion of Technology