Titles

Empirics of technological change

“Dynamics of global technological capabilities distribution patterns.…”
1.1.1 Free writing, thesis statement
Managing national policies on innovation and technological change starts with taking a bearing
on a nation’s technological capabilities, its relative position and direction of change. We have
quite a few direct measures of technology diffusion levels, industrial, R&D and education
statistics, survey-based composite indexes and indirect measures like GDP and Total Factor
Productivity. Our choice of a measure depends upon how we define and understand
technological capability, or our theory behind measurement (ref). However, there is no
consensus on defining and measuring technology rather it is the key contention between
established schools of thought. Traditional economics considered knowledge or technology as an
exogenous factor and in the analysis, allocated it to the residual.
On the contrary, Schumpeterian, evolutionary or innovation systems scholars turned their full
focus on technology. They consider technological capabilities as the stock of explicit and tacit
knowledge, existing in embodied and disembodied form (ref), in complex, and multi-
dimensional adaptive systems (ref). Moreover, technologies come in clusters or revolutions and
diffuse across the globe at different rates, depending on the absorptive capacity of the recipient
nations.
Technological capabilities change slowly and accumulate over time,
Pay attention to the theory behind measurement
There is a gap between the scholar and the policymakers, we need a study that bridges it.
Therefore, they suggest with necessary caution, the use of indexes of technological capability
that combine the creation and diffusion of technology with development of human skills. As
these serve the basic information purpose and as a means to analyze the theoretical models and
questions. Basic information such as where a country stands in terms of technological
capabilities, and how fast or slow its moving w.r.t. other nations, has to be used without being
drawn into a beauty context or medals table mindset. Theory testing relies on identifying the
latent variables used to find cluster patterns and to understand the relationship between the
variables and later their convergence patterns.
The hypothesis and questions seems to come from a convergence of theoretical insights, a
mixing of models and methods from the mainstream and the evolutionary economics called the
technology-gap or distance to frontier models.
However there are several opportunities and gaps in the research landscape that deserve
attention, there is about two decades of new data available from a single source (wb-wdi), and
quite a few theoretical frameworks that had been tested on older data. And it has been an era of
change a technology system unfolding or going through the introduction and fast growth stage a
paradigm going supernove under a microscope…
This new information has not been updated yet, and there are theories that could be perfectly
tested using this data. Combined these objectives would inform the policy maker not just about
their relative global position, their position in their relative groups and changes in it. Besides
their levels of absorptive capacity and innovation capability, and their distance to the whole
frontier but also to the immediate threshold to switch over to the next stage.
Our findings like the dichotomous three clubs, with a first and a second sub group. And we
discovered that nations have moved much more frequently but remained generally unchanged the
apparent shifts are relative to other nations the expansion of the frontier or fast chatching up of
other groups affects how nations are grouped and how they become more or less similar to one
group rather than another. All these findings have policy implications if we have emerging
centers of innovation how would that affect the economic social and political landscape at the
global level. How the global middle class of adapters would affect the leaders and marginalized
nations by keeping and augmenting older innovations to help the marginalized catch up and keep
the available and not stretch the technology gap too far to break the catchup sequence.
Understanding a nations technological level guides policy decisions by identifying the more
important areas and avoid misallocation of technological knowledge.

These untested models include the dual technology opportunity hypothesis by Carlota perez and
variable or non-linear relationship between absorptive capacity and technological capabilities by
ranjish narula.
Abstract
Intro 5 page, lit, 10 page, methods, 2 page, results 10 pages, conclusion and discussion 5, total 32

2 Introduction (5 pages,)
We live in a world of stark contrasts; on one hand there are more mobile phone subscriptions
than there are people in the world, and every other person has access to the internet (ITU, 2020),
but on the other hand almost one third of humanity still do not have access to basic sanitation
facilities (WHO, 2019). In the wake of this technological revolution, many emerging economies
including China and India have experiences very fast economic growth, even surpassing Angus
Maddison’s (2007) estimates, yet 42 percent or higher percentage of people is living on less than
$5.50 a day of which 10 percent on even less than $1.90 a day (World Bank, 2020). With
shrinking technology adoption lags (D. Comin & Hobijn, 2010), there has been a great
convergence in terms of the diffusion of information technologies, but failing to exploit the
hidden potential of these technologies, a vast portion of the world may remain permanently
characterized by divergence (Archibugi & Pietrobelli, 2003, D. Comin & Mestieri, 2018).
Despite the economic and technological convergence associated with economic globalization, technological
specialization patterns are distinct across countries (Dunning & Narula, 1996)

2.1.1 The great divergence

2.1.1.1 Unconditional convergence in technology,
These years have been the years of globalization, promising that free trade and technology would
unleash progress and prosperity, without much need to engineer the development process with
policy variables, though theory and evidence indicate otherwise (Castaldi, Cimoli, Correa, &
Dosi, 2008). Links up nicely with conditional convergence, (absence of unconditional
convergence means there is no free or passive diffusion or spillover, but in technological
convergence we do find unconditional convergence, or do we) we do..
I show in this paper that unconditional convergence does exist, but that it occurs in the modern
parts of the economy rather than the economy as a whole. In particular, I document a highly
robust tendency towards convergence in labor productivity in manufacturing activities,
regardless of geographic location and country-level. the central conclusion of this paper:
manufacturing exhibits a strong tendency for unconditional convergence. Even within
manufacturing some of the “escalators” move up more quickly than others.(Rodrik, 2013). So we
need industry, and the type that converges faster.
Technological and income divergence as secular patterns(Castaldi et al., 2008)
The “Great Divergence” in incomes started after the year 1600, permanently split the world into
rich and poor countries since the nineteenth century. The ratio of richest to poorest rises to more
than 10 by 1870 (for the United Kingdom) and then to more than 100 by 2010 (for the United
States). Across the range of countries, rapid growth takes hold at different points in time. Western offshoots..
much of continental Europe was ready to absorb the new production techniques developed and
applied in Britain. Similarly, the so called “Western offshoots” (A Maddison, 2001)— the United
States, Canada, Australia, and New Zealand—were able to acquire the necessary prerequisites
thanks to large immigration…growth takes off in Japan after World War II. Other Asian tigers immolate the
japense example, and Rapid growth since 1978 raises China’s living standards to more than a factor of 25 over the
benchmark level of $300 per year (Angus. Maddison, 1995), (Robert E. Lucas Jr., 2000), and
(Pomeranz, 2009). (Robert E. Lucas Jr., 2000)(Jones, 2016).
During this divergence, not just the gap between developed and developing nations widened,
developing countries typically experienced deindustrialization (Rodrik, 2014). Their industrial
output failed to keep up with population growth. European colonists had set up “extractive”
institutions were designed to get the raw materials to the core as cheaply as possible.
Specialization in primary commodities did not encourage skill accumulation and delayed the
reduction in fertility and population growth, commodity-exporting countries gave up
productivity in exchange for population(Galor & Mountford, 2008). Phases of global
demographic transition correlate with phases of the Great Divergence and Great Convergence
(Korotayev, Goldstone, & Zinkina, 2015)
Mainstream economists have concluded from the Japanese experience and other countries in East
and Southeast Asia. A model of export-oriented industrialization, a combination of private-sector
entrepreneurship with government inducements and cajoling. Japan in 1950–73, South Korea in
1973–90, and China since 1990. These East Asian tigers, along with a few more of their
neighbors, grew at 7–8 percent per annum in per capita terms, experiencing more rapid
convergence with the living standards of the West than anything seen to date. These growth
miracles were based on rapid industrialization and exports of manufactures. Clearly, the postwar
global economy presented huge rewards to those lagging countries that got their policies right.
(Rodrik, 2014)
like two centuries ago, there is no ‘natural drift’ toward the international frontier in technologies
and income. On the contrary. However, the quite a few experiences of successful catch-up also
tell a story of ‘windows of opportunities’, which appropriate mixtures of policies and institution-
building might help to seize (Rodrik, 2014)

2.1.1.2 (Jones, 2016) deep history,

(Jones, 2016)

(During the 30-year period 1960–1990, production in the world as a whole—Communists, former colonies,
everyone—grew at 4 percent per year, while world population grew at 2 percent per year. The real income of an
average person has more than doubled since World War II and the end of the European colonial age. This
remarkable growth in income per person has taken place very unevenly: The average figure combines the
experiences of economies that have stagnated at pre-industrial income levels with those of other economies, equally
poor in 1950, that have industrialized at unprecedented rates.)

First, incomes in the countries of Western Europe have been roughly stable, around 75% of the US level.
After rapid growth in the 1980s (and before), Japan peaked at an income relative to the United States of 85% in
1995. Since 1995, though, Japan has fallen back to around 75% of the US level. The rapid growth of China since
1980 and India since around 1990 are also evident in this figure. The contrast with sub-Saharan Africa is particularly
striking, as that region as a whole falls from 7.5% of US income in 1980 to just 3.3% by 2000. Since 2000, many of
the countries and regions shown in Fig. 23 exhibit catch-up to the United States

why should the 500,000 people in Luxembourg get the same weight as the 1.4 billion people in China?

(Bourguignon & Christian, 2002) and especially (Sala-i-Martin, 2006). In 1960, 51% of the world’s population lived
on less than 3 dollars per day (measured in 2005 US dollars). By 2011, less than 5% of the world’s population lived
below this level. The big difference, of course, is China and India, which between them contain more than one third
of the world’s population. In 1960, China and India were very poor, with incomes below $2.75 per day, while by
2011 average incomes were $10 per day in India and $22 per day in China. From the standpoint of the individual,
the most outstanding fact of economic growth over the last 50 years is how many people have been elevated out of
poverty.

differences in physical capital contribute almost nothing to differences in GDP per worker across countries

c The general lack of correlation between the capital-output ratio and GDP per person is discussed by (Feenstra,
Inklaar, & Timmer, 2015)

the innovation systems literature associates the cause of convergence with the establishment of
national innovation systems.
2.1.1.3 Dosi, 2008 Globalization and Convergence, Rather
divergence Castaldi, Dosi, 2008
(Castaldi et al., 2008)
Moreover, despite technological diffusion taking place at rather high rates, at least among OECD
countries, important specificities in “national innovation systems" persist, related to the
characteristics of the scientific and technical infrastructure, local user-producer relationship and
other institutional and policy features of each country (Lundvall (1992), Nelson (1993),
Archibugi, Howells and Michie (2001)). In an historical perspective, Freeman (2002)
convincingly argues how catch-up of countries has critically relied on the ability to build
successful national innovation systems. This has been, in turn, the case for England, US, Japan
and, most recently, the Asian tigers. To repeat, the dominant tendency throughout the foregoing
secular picture hints at long-term divergence in relative technological capabilities, production
efficiencies and incomes. Together come however two more hopeful messages. First,
notwithstanding prominently divergent patterns, one has also witnessed secularly increasing
average levels of technological knowledge within most countries, and together also in the levels
of per capita income. Second, while it holds true that the ``innovators club" has been remarkably
small and sticky in its membership, one ought to notice both the possibility of entry by a few
successful latecomers (in different periods, the US, Germany and Japan being the most striking
examples) and also the possibility of falling behind by very promising candidates to the club (cf.
the vicissitudes of Argentina over the last century). Given all that, how is such a long-term
scenario affected by those recent changes of the economic and political relations in the
international arena collectively coming under the name of “globalization”? In order to offer some
tentative answer, one ought to start by specifying what precisely ‘globalization’ stands for.
 2.1.1.4 Defining technology
Technology as the way of getting things done is more than a matter of lists of inputs and outputs;
it is more than a matter of codified information in blueprints and recipes, for it depends greatly
on the human dimensions of skill and knowing. It is inseparable from the idea of a division of
labour and a correlated division of knowing that is ultimately concerned with the productive
transformation of materials and energy to meet human needs. Thus, it is capable of many forms
of expression, as knowledge and information, as skills and capabilities and as human built
structures. This is the heritage of Smith, Marx, Schumpeter and Marshall, it is a heritage that is
capable of a great deal more development. (Metcalfe, 2010)
2.1.1.5 Mainstreams treatment of technology
(Romer, 1994)

If macroeconomists look only at the cross-country regressions deployed in the convergence controversy, it will be
easy to be satisfied with neoclassical models in which market incentives and government policies have no effect on
discovery, diffusion, and technological advance. But if we make use of all of the available evidence, economists can
move beyond these models and begin once again to make progress toward a complete understanding of the
determinants of long-run economic success. the standard neoclassical prescription-more saving and more schooling.

2.1.1.6 What have we learnt from the convergence debate islam

2006
(Islam, 2003) Introduce convergence and growth economics
Abstract. This paper surveys the convergence literature. It begins by laying out different
definitions of convergence and by showing the link between the convergence issue and the
growth theory debate. The paper then follows the convergence research conducted along four
different approaches, namely the cross-section, panel, time-series, and distribution approaches.
The paper shows the association of these methodological approaches with various definitions of
convergence and highlights the connections among the convergence results. It shows that,
despite some impressions to the contrary, there is considerable agreement among the results.
Although the convergence research might not have solved the growth debate entirely, it has
helped both the neoclassical and the new growth theories to adapt and evolve. The research on
convergence has established new stylized facts regarding cross-country growth regularities. It
has brought to fore the existence of large technological and institutional differences across
countries and has given rise to new methodologies for quantifying and analyzing these
differences. This is providing a new information base for analysis of technological and
institutional diffusion and for further development of growth theory in general.

The nature of technology is largely ignored in economic theory, it being considered sufficient to
treat technology as a constraint on productive opportunities(Metcalfe, 2010). Although
technology (along with labor and capital) was accepted as an important determinant of economic
growth (Veblen, 1915),(Abramovitz, 1956), initially it was simply treated as purely exogenous
factor in the production function based models(Solow, 1957). The change in Total factor
productivity was used as a measure of the technical change or efficiency, called, “a measure of
our ignorance” (Abramovitz, 1956, p 11),(Abramovitz, 1986),(Zvi Griliches, 1995) as it left
major part of economic change, unexplained.
,6 focuses on the particular“technical change”, that is, improvements in knowledge, methods,
and so on, was admitted as the driver of economic growth since(Solow, 1957)measured it as the
change in labor productivity due to capital deepening, and an exogenous “technical change”.;.

Finally, with the arrival of ‘new growth theory’ (Lucas, 1988),(Paul M. Romer, 1990),
(Grossman & Helpman, 1991),(Aghion & Peter, 1992),(Barro & Sala-i-Martin, 2004),
mainstream economists started modeling a country’s stock of technological knowledge as an
endogenous variable. This solved the problem of diminishing returns on capital accumulation
and thus technology as an endogenous factor became a resource that could put off these
diminishing returns. Notwithstanding the question whether technology is a stock or a flow
(ARCO), it is still described by Total Factor Productivity (Prescott, 1998) or other indirect means
such as, GDP, education, research and development, or the human capital (ref).
When modeling diffusion of technological knowledge from advanced to developing nations, it
was assumed as a freely available global public good (Fagerberg, 1994, p. 1149). Catchup and
convergence would be inevitable through a costless and automatic technology diffusion and
spillover process. Thus, the constraints associated with capital mobility became the main cause
of differences across countries. However, the empirical literature assessing the extent of
convergence across countries (Barro and Sala-i-Martin, 1992, 1995; Islam, 1995; Sala-i-Martin,
1996; Quah, 1997), ultimately acknowledged that the ability to apply existing technology and
generate innovations differs systematically across economies..
2.1.1.7 patterns of technological capabilities (convergence versus
divergence, catching-up versus falling behind) (Filippetti & Peyrache,
2011)
The other fundamental premise is that the process of technology adoption and diffusion does not occur in a
spontaneous way as the neoclassical theory claimed, but requires an explicit and costly effort (Pavitt, 1993);
(Levinthal, 1990). This paper aims to explore the patterns of technological capabilities (convergence versus
divergence, catching-up versus falling behind) (Filippetti & Peyrache, 2011)

2.1.1.8 Filippetti & Peyrache 2011 two modes of measurements of

technology tfp and composite indicators
(Filippetti & Peyrache, 2011) Unlike the neo-classical tradition, where TFP and GDP are used as proxies innovation
systems scholars tend to aggregating different dimensions (variables) Also indexes

“The two key tenants of the convergence debate are that access to technology and social
capability would condition economic convergence”
 2.1.1.9 Critisim of mainstream and Origin of NIS, like development
economics
The emerging “Evolutionary” tradition or the literature on “National Innovation Systems”
(Freeman, 1987; Dosi et al., 1988; Lundvall, 1992; Nel- son, 1993; Edquist, 1997)rejects the
mainstream economics’ simplistic assumptions about technology and focus on the underlying
factors that affect the rate and direction of technical change (B.-åke Lundvall, 2007). It tries to
answer basic questions like, how firms, industries and nations evolve overtime (Nelson &
Winter, 1982), and tries to capture the underlying process of learning (Dosi, 1999).
Innovation is regarded as the key driver for economic growth and national competitiveness (Hu
& Mathews, 2005). Economic change, including technological change, is an evolutionary
process(Malecki, 1997). “National innovation system”, (C. Freeman, 1982); (B.-Å. Lundvall,
1985); (C. Freeman, 1987) (B.-Å. Lundvall, 1992), (Smith, 1997), (Narula & Marin, 2003) and
“Learning systems” (Lall, 1992), (Viotti, 2002), is a systemic approach to the study of countries’
abilities to generate and profit from technology. This perspective argues that innovation results
not only from individual actors’ performance, but also from how they interact with one another
as parts of a system (Solleiro & Gaona, 2012), that is, systems of innovation. An innovation
system in most cases represents the serendipitous intertwining of institutions and economic
actors within industry which defined the stock of knowledge in a given location (Etzkowitz &
Leydesdorff, 2000). The systems of innovation place emphasis on interaction between various
actors involved in the innovation process. Thus, the reciprocal learning process across the
national economy is regarded as a major driving force for long-term economic development
(Fagerberg & Sapprasert, 2011). (Choi & Zo, 2019). The innovation scholars view that
technological capabilities are composed of clusters of innovations or different waves of industrial
development (Freeman & Louta, 2001) (perez). This way of modeling technological change has
generated some useful hypothesis, however this perspective is mostly explanation and this not
included in most of the analysis.
Innovation systems concept has its roots in the subject of development economics. (B.-åke
Lundvall, Joseph, Chaminade, & Jan, 2011), as earlier innovation scientists (C. Freeman, 1987),
Kim, turned their attention to the interaction processes underlying a country’s technological and
economic development in the Asian Newly Industrializing Economies. However, the developed
nations, where advanced innovation systems exist, get most of the attention of the innovations
systems literature. Adoption of the innovation system approach to developing countries is a
relatively recent phenomenon (Viotti, 2002); (Muchie, Gammeltoft, Lundvall, & Gammeltoft,
2003); (B.-Å. Lundvall, Intarakumnerd, & Jan, 2006).\
(Nelson, 2000) how did the newly industrialized economies manage to catch-up to the developed
economies is the key contention The key question is, how did the NIEs do it? And what are the
lessons for policies in other developing countries?
between the mainstream economics thinking and the evolutionary perspective. Where on the one
hand the mainstream economists associate the rapid development in these countries as simply
very high investment rates that enabled movements along a production function (J.-I. Kim &
Lawrence J. Lau, 1994); (Krugman, 1994). They insist that the greater portion of increased
output can be explained by increases in physical and human capital, which brought along modern
technology as a more or less automatic by-product. (Pack, Nelson, & Pack, 1997)call these
arguments “accumulation theories.”
In contrast, other economists have placed learning about and learning to master new technologies
as central in their analysis, highlighting the role of risk-taking entrepreneurship, effective
learning, and innovation (Pack & Westphal, 1986); (Amsden, 1994); (L. Kim, 1997)). (Pack,
Nelson, & Pack, 1999) call these arguments “assimilation theories.”
The acquisition and progressive mastering of technologies that are new to them, if not to the
world, obviously has been a central aspect of the newly industrializing economies (NIEs) (Pack
& Westphal, 1986); (L. Kim, 1997)
diffusion of embodied technology. In achieving the foregoing, technological learning and
capabilities have a central role to play (Lundvall et al., 2009).
(L. Kim, 1997)
Learning can start with simpler reverse engineering, and evolve into Duplicative imitation,
creative imitation and finally as the developing nation approaches the technological frontier,
innovation.
involved activities that sensed the potential needs in the market, activities that located knowledge
or products that would meet the market needs, and activities that would infuse these two
elements into a new project.
Reverse engineering also involved purposive search for relevant information, effective
interactions among technical members within a project team and with marketing and production
departments within the firm, effective interactions with other organizations such as suppliers,
customers, and – for more complex products and technologies – local R&D institutes and
universities. Such activity required the willingness to take risks and to learn from experience.
Considerable trial and error and try-again learning generally was involved in achieving a
satisfactory result.
Imitation does not necessarily mean illegal counterfeits or clones of foreign goods; it can also be
legal, involving neither
Duplicative imitation conveys no sustainable competitive advantage to the imitator in a
technological sense, but it sustains competitive edge in price if the imitator’s wage cost is
significantly lower than the originator’s. For this reason, duplicative imitation, if legal, is an
astute strategy in the early industrialization of low- waged, catching-up countries, as the
technology involved is generally mature and readily available and duplicative imitation of
mature technology is relatively easy to undertake.
Duplicative imitation alone, however, is insufficient if a NIE is to achieve further
industrialization. Both creative imitation and innovation are required not only to catch up in
existing industries but also to challenge advanced countries in new industries. Design copies,
creative adaptations, technological leapfrogging, and adaptation to another industry are creative
imitations. Design
Technological leapfrogging can occur to a late entrant’s advantage when the latecomer gains
access to newer technology and uses it with a more accurate understanding of the growing
market than was possessed by the original innovator. Adaptation to another industry illustrates
the
Creative imitations aim at generating imitative products but with new application of innovations
in one industry for use in another. Creative imitations aim at generating imitative products but
with new performance features. They involve not only such activities as benchmarking but also
notable learning through substantial investment in R&D activities to create imitative products,
the performance of which may be significantly better or production cost considerably lower than
the original. Bolton (1993) argues that Japanese strategy represents these features.
Many skills and activities required in reverse engineering have easily been transformed into
activities called R&D, as some NIEs approached the technological frontier. Skills and activities
required in these processes are in fact the same as in the innovation process in R&D

For evidence on knowledge spillovers, see Griliches (1992), Coe and Helpman (1995), Jones and
Williams (1998), (Klenow & Rodríguez-Clare, 2005), and (Bloom, Mark, & Reenen John Van,
2013).
2.1.1.10 Summery of revolutions here
2.1.2 The Technology Gap Approach, absorptive capacity,
These innovation scholars often serve as a bridge between the mainstream and innovation
systems approach by their combination of assumptions models techniques from the two sides by
integrating the technology gap research within the standard growth-accounting approach.
Prominent examples include, Adding a Schumpeterian perspective to the mainstream economic
thought gave rise to the technology gap approach (Ames and Rosenberg, 1963; Nelson, 1981;
Nelson and Winter, 1982; Nelson and Wright, 1992), (Fagerberg, 1994).
emerged from the convergence debate which ultimately became a predecessor to the “National
Innovation Systems” approach or “Evolutionary Economics”. They emphasize that technological
innovation does not flow freely across economic actors or distances, it required investment in
technological learning and adaptation to effectively catchup to the advanced nations(Castellacci,
2008).
Schumpeterian endogenous growth models(B. P. Howitt, 2000), (P. Howitt & Mayer-Foulkes,
2002) (Castellacci & Archibugi, 2008)(Aghion, Akcigit, & Howitt, 2014). And the convergence
clubs literature from a Schumpeterian perspective (Castellacci, 2008), used technology-gap
growth equation in a dynamic panel model specification. Similarly, productivity growth and
catching up from the mainstream models are complemented with a technology gap explanation
in (Filippetti & Peyrache, 2017). These scholars point to innovation and the international
diffusion of new technologies as the possible sources of polarization and divergence or
convergence. They recommend that investment in technological capabilities could spur
productivity catch-up, thanks to technology accumulation, thus policies for technological
capabilities accumulation are necessary.
2.1.2.1 The Schumpeterian literature: tech gap and AC catching up
convergence imitation-based catching up
(Castellacci & Natera, 2013)The Schumpeterian literature on innovation and economic growth does however
provide important insights and key building blocks for developing an analytically stronger framework to study NIS
dynamics. First, idea-based new growth models point out the important role of national innovation capability for
the growth of the economic system (Paul M. Romer, 1990); (Furman, Porter, & Stern, 2002). Secondly, technology-
gap models highlight the important role played by countries’ absorptive capacity for imitation-based catching up,
and show the large set of factors that contribute to define a country’s absorptive capacity (Abramovitz, 1986), (Barro
& Sala-i-martin, 1992); (Mendonça, 2008); Fagerberg and Srholec, 2008; Lee and Kim, 2009).

2.1.2.2 The coevolution between innovative capability and

absorptive capacity.
In the cross-country applied growth literature, innovation and imitation have typically been regarded as two
distinct (albeit related) drivers of growth and catching up. More precisely, while it is widely acknowledged that
R&D and innovation investments may also increase the imitation ability of nations, the opposite causation
mechanism – linking countries’ absorptive capacity to their innovation capability – has not been investigated to the
same extent. This paper argues that, adopting a time series perspective, it is important to investigate the existence of
a two-way relationship (coevolution) that links together the dynamics of these dimensions in the long run.

2.1.2.3 Diffusion of Technology

different paths of evolution of economies Deference in technological development and uneven
access of knowledge stocks is a major explanatory factor behind Differences in creation and
exploitation of knowledge (Lundvall, 1992; Nelson, 1993; Edquist, 1997). understanding of the
functioning and evolution of the competencies of nations (Fagerberg & Verspagen, 2002).
2.1.2.4 Hewitt diffusion as source of polarization(groups clusters of
convergence)
Explanation, recently proposed by Schumpeterian endogenous growth models(B. P. Howitt, 2000) ((P. Howitt &
Mayer-Foulkes, 2002)) points to innovation and to the international diffusion of new technologies as the possible
sources (Castellacci & Archibugi, 2008) of polarization and convergence(Aghion et al., 2014)

)). In an historical perspective, Freeman (2002) convincingly argues how catch-up of countries
has critically relied on the ability to build successful national innovation systems. This has been,
in turn, the case for England, US, Japan and, most recently, the Asian tigers. To repeat, the
dominant tendency throughout the foregoing secular picture hints at long-term divergence in
relative technological capabilities, production efficiencies and incomes. Together come however
two more hopeful messages. First, notwithstanding prominently divergent patterns, one has also
witnessed secularly increasing average levels of technological knowledge within most countries,
and together also in the levels of per capita income. Second, while it holds true that the
``innovators club" has been remarkably small and sticky in its membership, one ought to notice
both the possibility of entry by a few successful latecomers (in different periods, the US,
Germany and Japan being the most striking examples) and also the possibility of falling behind
by very promising candidates to the club (cf. the vicissitudes of Argentina over the last century).
Given all that, how is such a long-term scenario affected by those recent changes of the
economic and political relations in the international arena collectively coming under the name of
“globalization”? In order to offer some tentative answer, one ought to start by specifying what
precisely ‘globalization’ stands for.
Another fact that we’d like to know more about is the extent of knowledge spillovers across
countries. It is well appreciated that each country benefits from knowledge created elsewhere in
the world, but quantifying these benefits is difficult. (Eaton & Kortum, 1999) suggest that only
60% of US growth in recent decades comes from knowledge created in the United States, and the
numbers for local knowledge in Japan (35%) and the United Kingdom (13%) are even smaller. A
related fact courtesy of (R. B. Freeman, 2009)is this: In the 1970s, China produced a negligible
number of Ph.D.’s in science and engineering, but by 2010, China was producing 26% more than
the United States. In a world of ideas, the economic development of China and India may have a
profound effect on growth in the future. How many future Thomas Edisons, Albert Einsteins,
Steve Jobs, and Sam Waltons are out there, waiting for their talents to be appropriately nurtured?
papers and patents reflect mainly the formalised component of scientific and technological
knowledge.
good history debate Perspectives on innovation in economic growth and catch-up,
(Santangelo, 2005)
The factors that affect economic progress across countries have been of primary interest to
political scientists, economic historians, economists, and policymakers –and, although
considerable obstacles exist, may be able to leapfrog leader countries by developing institutions
that deal with contemporaneous challenges more effectively than those developed in previous
periods. These authors identify a fundamental question regarding whether laggard countries’
wealth and technological progress increase at a higher rate than that of leader countries.
2.1.2.5 Mentions of furman Hypothesis 1 from this, tech gap guy
The adoption of the innovation system approach to developing countries is a relatively recent phenomenon (Viotti,
2002); (Muchie et al., 2003); (B.-Å. Lundvall et al., 2006) and arguably still in its infancy. Moreover,. Still there
have been some attempts in that direction, see, for example, (Furman et al., 2002)and (Furman & Hayes, 2004a)

Despite its highly stylized character, this idea provides an important step forward in the theory of innovation
and growth, since it implicitly points out the two-way interactive relationship that links the dynamics of
innovation and absorptive capacity in the long-run only a limited number of studies have empirically
investigated the dynamics of innovative capability over time and the main factors that may explain its long-
run evolution ((Furman et al., 2002); (Varsakelis, 2006); (Filippetti & Peyrache, 2011)). This is a crucial task
for future research in this field.

(Castellacci & Natera, 2013)The Schumpeterian literature on innovation and economic growth does however
provide important insights and key building blocks for developing an analytically stronger framework to study NIS
dynamics. First, idea-based new growth models point out the important role of national innovation capability for
the growth of the economic system (Paul M. Romer, 1990); (Furman et al., 2002). Secondly, technology-gap
models highlight the important role played by countries’ absorptive capacity for imitation-based catching up, and
show the large set of factors that contribute to define a country’s absorptive capacity (Abramovitz, 1986), (Barro &
Sala-i-martin, 1992); (Mendonça, 2008); Fagerberg and Srholec, 2008; Lee and Kim, 2009).

2.1.2.6 (Furman et al., 2002) The determinants of national innovative

capacity, early measurement
Earlier work on measuring national innovation…(Furman et al., 2002)
National innovative capacity is the ability of a country to produce and commercialize a flow of innovative
technology over the long term. National innovative capacity depends on the strength of a nation’s common
innovation infrastructure (cross-cutting factors which contribute broadly to innovativeness throughout the economy),
the environment for innovation in a nation’s industrial clusters, and the strength of linkages between these two.

the production function for international patents is well-characterized by a small but nuanced set of observable
factors. We find that while a great deal of variation across countries is due to differences in the level of inputs
devoted to innovation (R&D manpower and spending), an extremely important role is played by factors associated
with differences in R&D productivity (policy choices such as the extent of IP protection and openness to
international trade, the share of research performed by the academic sector and funded by the private sector, the
degree of technological specialization, and each individual country’s knowledge “stock”). Further, national
innovative capacity influences downstream commercialization, such as achieving a high market share of high-
technology export markets. Finally, there has been convergence among OECD countries in terms of the estimated
level of innovative capacity over the past quarter century.

2.1.2.7 Links to clusters, clubs, Furman and Hayes (2004)

Catching up or standing still? National innovative productivity among
‘follower’ countries, 1978–1999, also an
2.1.2.8 example of convergence of two schools of thought,
(Furman & Hayes, 2004b)
estimation of a production function for innovations at the world’s technical frontier. Based on
the results of this analysis, we classify countries into categories reflecting their historical levels
of innovative capacities and develop counterfactual indices that identify the factors that
correspond to long-run improvements in innovative productivity. These exercises suggest that
the development of innovation-enhancing policies and infrastructures are necessary for achieving
innovative leadership, but that these are insufficient unless coupled with ever-increasing
financial and human capital investments in innovation.
The adoption of the innovation system approach to developing countries

The role of governments as a market facilitator and provider of complementarily created,

location-specific assets is more critical (Narula & Marin, 2003). The evolutionary theory stands
for a broad view of innovation and the systems literature for active public action toward the
leadership, sponsorship and coordination of (local) innovation, which are positions that contrast
with the theoretical views of neoclassical economics.(Perilla Jimenez, 2019)  
Technology, Learning, and Innovation (Nelson, 2000) Difference between mainstream and evolutionary thinking
and A model of catching up
 2.1.2.9 Innovation and developing nations,
The next collection of facts related to frontier growth look beyond the aggregate of GDP. These
facts are related to structural change (the decline of agriculture and the rise of services, especially
health), changes in leisure and fertility, rising inequality, and falling commodity prices
the 2007 report (UNCTAD, 2007) emphasized the centrality of technological learning to
technological progress and structural change in poor developing countries. The argument goes in
the direction of what we, following UNU-INTECH (2004), choose to describe as diffusion-
based innovation.
In the 1980s, studies shifted to ‘diffusion-based innovation’, that is, the processes involved in
the adoption, adaptation and mastering of imported technologies by developing countries.
subjects of innovation systems (IS), technological learning and technological capabilities (TC) in
developing countries. Unfortunately, the extent of knowledge (both theoretical and empirical)
that is available on this concept in the less developed countries is still low(Siyanbola, W.,
Egbetokun, A., Adebowale, B. A., & Olamade, 2016).
(Albert et al., 2018)
innovation scholars ever since assume international technology diffusion as a deliberate and
costly process. A process where the recipient nations have to create a kind of an adaption or
learning system to absorb or utilize the existing technological knowledge to suit its own specific
needs. And without these they would be simply marginalized and be always trapped in a
Malthusian diminishing returns (Jones, 2016) (Vollmer, Holzmann, & Schwaiger, 2013)
2.1.3 Technological convergence
2.1.3.1 Castellacci 2008 Technology clubs, technology gaps and
growth trajectories
Fulvio Castellacci Structural Change and Economic Dynamics 19 (2008) 301–314

(Castellacci, 2008b), his objectives would be good for our work

This paper looks at the convergence clubs literature from a Schumpeterian perspective, and it follows the idea that cross-
country differences in the ability to innovate and to imitate foreign technologies determine the existence of clustering, polarization
and convergence clubs.

The study investigates the characteristics of different technology clubs and the growth trajectories that they have followed over
time. The cross-country empirical analysis first explores the existence of multiple regimes in the data by means of cluster
analysis techniques. It then estimates a technology-gap growth equation in a dynamic panel model
specification. The empirical results identify three distinct technology clubs, and show that these are characterized by remarkably
different technological characteristics and growth behavior.

Presents a three cluster model..repeats most of the other paper, uses same data but different
method. Ignores movements..
We also added to testing with a different methid the mnl method. Ignores old and new.. uses
them as one.. even the role of interent and its changes indicates that they are not synonymous..
ignores the threshold.. doesn’t really talk about convergence rates as such
Traditional infrastructures are represented by electricity and fixed telephony. The electricity variable is positive and
significant in the regressions in Table 2. The piecewise linear version of the model in Table 3 suggests however that
this indicator has a significant effect for the followers club but not for the others. The telephony variable is also
positively related to income growth, as expected, and this relationship is particularly strong (and more significant)
for the marginalized group of economies. Traditional technological infrastructures thus appear to be more relevant
catching-up factors for countries that are far below the technological frontier, representing one of the basic aspects
that contribute to define the absorptive capacity and imitation capability of developing economies. (this information
can be cited in introducing the old innovations literature in the revolutions and perez section for being old and as
the missing link of theory, in the narual literature as a/c i/c theory and introducing the indicators in the index)

In the marginalized club, economic development is negatively related to the openness of the economy, and
positively related to the structural change variables (industry and services shares of GDP), innovative activities
under taken by the public science system(articles), and traditional infrastructures (fixed telephony). The growth
effect of human capital is mostly indirect as measured by the catching-up interaction effect.

Hypothesis 1: Technology clubs. There exist various country groups characterized by different levels of
absorptive capacity and innovative ability. Rich countries perform well in terms of both aspects. Middle-income
countries have low innovative ability but relatively high absorptive capacity. Less developed economies are poor in
both aspects.

Thresholds divide the groups, the clubs fluctuate, expand and contract, the hypothesis implied behind the theories,
such as the convergence hypothesis, the thresholds, the number groups and their dynamics.. we start with a clean
slate, not being prisoner to tradition, looking for broader heterogeneity, dynamics and new theoretical insights
along with the information for decision making..

Hypothesis 2: Growth trajectories. Innovative ability and absorptive capacity are crucial factors of growth and
catching up. However, the growth effects of innovative ability and absorptive capacity (and other related factors)
greatly differ across the technology clubs.

These are universal hypothesis and our work reaffirms them with a different approach and with latest data.. and
does over and above that too..

1990s.

I like his design to start with marginlised and go to the leaders.

His methodological innovation

The second step of our clustering exercise is to make use of classification and regression tree techniques (CART) in
order to check the robustness of the hierarchical analysis results, and to identify the threshold values of the input
variables that determine what club each country belongs to (Durlauf and Johnson, 1995). Further details on these
methods of cluster analysis are reported in Appendix B

since convergence rates have been studied till 2000 we extend the investigation to 2015 covering the most
turbulent and happening period of recent economic history. These are the years when shape of the world has
changed. So that’s our fist contribution… second is discovery of more than three clusters.. then movements among
clusters and the dynamics of technological landscape. Then the role of old and new technologies and also the role
of absorptive capacity and innovation with reference to the thresholds..

since all the indicators have a strong correlation how do they use it in regression equations? On the contrary we use
the factors extracted from the variables, determined through principle component analysis, according to their
behaviors, having no correlation.. he says there is no autocorrelation.. something to do wth piece vise regression
and allowing slopes to differ for each sub group. \

2.1.3.2 Castellacci 2008 Technology clubs, technology gaps and

growth trajectories
Fulvio Castellacci Structural Change and Economic Dynamics 19 (2008) 301–314

To what extent have these new insights been recognised, not to say accepted, by applied growth
theory in mainstream economics? Not much, arguably. Applied growth theory has achieved
considerable progress in the last decade, and, moving away from the traditional cross country
regression framework, it has made use of a wide array of econometric techniques to point to the
existence of a great deal of heterogeneity across countries.1 However, the study of
macroeconomic variety has mainly been analysed in terms of economic factors, while the role of
cross-country differences in the ability to create and imitate advanced knowledge (his gap)
This is particularly evident when we look at the recent flourishing of empirical studies in the
convergence clubs tradition (Durlauf and Johnson, 1995). The general idea of this literature,
that countries that differ in terms of structural characteristics and initial conditions tend to
experience diverging growth performances, has increasingly attracted the attention of applied
growth scholars, who have recently proposed a range of different economic explanations for the
existence of convergence clubs in the world economy (Desdoigts, 1999; Hobijn and Franses,
2000; Johnson and Takeyama, 2001; Papageorgiou, 2002; Fiaschi and Lavezzi, 2003; Canova,
2004). None of these previous works, however, has investigated the uneven distribution of
knowledge across nations and the importance of this for the formation of clubs.(gap), each nation
needs to know where is stands not just in a broad group but in specific terms as possible,
intensity term,,)
For innovation scholars, the idea that cross-country differences in knowledge stocks and
technological capabilities may be one major factor to explain the existence of different country
clubs is a natural hypothesis to investigate (see Godinho et al., 2005).
What is the role of technological knowledge for the formation of clubs?
The paper investigates this unexplored question by carrying out an empirical study of cross-
country differences in the ability to exploit the process of knowledge creation and dissemination,
focusing on a large sample of developed and developing economies in the 1990s.
The purpose of the paper is thus to study the existence, characteristics and dynamics of
different technology clubs in the world economy. The study, empirical in nature, will
explore the existence of groups of countries characterized by different levels of knowledge
stocks and technological infrastructures, point out their characteristics and the distance
that separates them, and analyse their different dynamics over time.
2.1.3.3 Ewa (Lechman, 2014), 100% diffusion, smart phones and
internet, intro
Keywords: Information and Communication Technologies, adoption patterns, tech- nology
diffusion, S-shaped curve, developing countries (Lechman, 2013)
The paper, purely empirical in nature, reports on the pace of adoption of new Information and
Communication Technologies in developing countries, and – addi- tionally – investigates
country-specific ICT diffusion patterns. We expect to uncover the S-shape curve in the diffusion
process in most of developing countries, as well as in the whole country sample.
2.1.4 The clubs
2.1.4.1 Initial clubs, Durlauf and Johnson 1995
to identify whether multiple regimes in cross-country growth behavior are present we find
subsets of countries which appear to possess very different production functions. These
differences in turn suggest that more developed countries have higher output-labor ratios than
implied by their capital-labor ratios alone.(Durlauf & Johnson, 1995)
in Barro (1991) this negative coefficient may be found for a large cross- sectiop. of countries
when one controls for factors such as education, investment rates and political stability
A class of growth models, starting with Azariadis and Drazen (1990), produces multiple locally
stable steady states in per capita output.
Countries associated with the same steady state obey a common linear regression.

multiple regimes in cross-country growth behavior

better understanding the statistical properties of the data set results as well as evaluating the
compatibility of cross-country growth patterns with multiple steady state models. Our
conclusions are twofold. First, we reject the null hypothesis that all countries obey a common
linear model. This means that the equation estimated by previous authors to show the presence of
convergence is misspecified. Second, by using regression tree analysis to identify countries
obeying a common linear model,

Clubs in standard economics literature, clubs in technology convergence literature,

club dynamics over time
In short, the results of the cluster analysis lead to the identification of three
technology clubs with markedly different levels of technological development. The
characteristics of these technology clubs closely resemble those of the ‘innovation’,
‘imitation’ and ‘stagnation’ groups identified by the recent model of Howitt and
Mayer-Foulkes (2005). (also take to earlier part)

2.1.4.2 (Castellacci, 2006) Convergence and Divergence among

Technology Clubs (Castellacci, 2006)
Castellacci, F. (2006). Convergence and Divergence among Technology Clubs. DRUID
Conference, 9192(06). Copenhagen.

The purpose of the paper is thus to study the existence, characteristics and dynamics of different
technology clubs in the world economy. The paper, empirical in nature, will explore the
existence of groups of countries characterized by different levels of technological development,
point out their characteristics and the technological distance that separates them, and analyze
their different dynamics over time.(Castellacci, 2006)
The paper investigates cross-country differences in technology in a large sample of developed
and developing economies over the 1990s. The empirical analysis indicates the existence of three
technology clubs with markedly different levels of technological development: advanced,
followers and marginalized countries. The technology clubs also differ with respect to their
dynamics over the 1990s. While the club of followers is characterized by a process of gradual
convergence towards the technological frontier, the group of marginalized has experienced an
increase in its gap in terms of innovative capabilities.(Castellacci, 2006)
A comparison of the variation coefficients across the two periods allows also to test whether the
162 countries are somehow con- verging or diverging in their technological capabilities. All the
indicators show a certain convergence from the past (that is, a reduction of the divergence
signaled by the coefficients), especially with regard to Internet (many countries in the past did
not possess it at all, while it was already a common infrastructure in others), telephony and
literacy rate. It also emerges that the propensity toward convergence is much faster in
infrastructure, including new ones such as Internet, than in the creation of technology.
Especially for potential leaders and latecomers: improved technological capabilities are strongly
associated to GDP growth. (Archibugi & Coco, 2004)
2.1.4.3 Imp, Technology Clubs, |Cluster analysis \OECD handbook
There has been little consideration yet in seeking empirical evidence for the idea of the existence of clubs of
countries characterized by different levels of technological development and different technological dynamics
(Castellacci, 2008b); (Castellacci & Archibugi, 2008) . Different statistical tools would be needed to classify
nations into homogeneous groups (Archibugi, Denni, & Filippetti, 2009a).. Luckily, different variants of Cluster
Analysis technique have been tested using the example of TAI, in OECD Handbook on constructing composite
indicators: methodology and user guide (Nardo et al., 2005a), serving as a precedent for TAI-15.

2.1.4.4 Park et al., 2015) a very similar paper

(Park, Choi, & Hong, 2015) a very similar paper objectives and methods, principle component, Log R, ICT diffusion
index, clusters but also different in many ways.. digital divide, convergence, groups of convergence, difference
between the terminologies.. convergence level and speed of convergence. factors found are flimsy. Regression
based clustering Using (Phillips & Sul, 2007) log t convergence test, we found that the level of
digitalization convergence that exists among the 108 countries analyzed can be categorized into
three different groupings. As for policy measures that can be used to foster a creative economy,
marginal effect analysis (odds ratio in our case,
http://econometricsense.blogspot.com/2016/03/marginal-effects-vs-odds-ratios_11.html)
identifies the tertiary education entrance rate as being the most effective means for raising the
digitalization convergence level.
2.1.4.5 Threshold desai
This requires flexible, competitive, dynamic economic environments, private and public sector institutions, and a
minimum of physical infrastructure (Desai, Fukuda-Parr, Johansson, & Sagasti, 2002).

2.1.4.6 ?arco 2011, tech convergence in innovation capabilities

(Archibugi & Filippetti, 2011)
Boldrin et al. (2001) distinguish four main hypotheses about convergence proposed by the
literature: ranging from a strong convergence hypothesis ala Solow (1956), to a non-convergence
one caused by the presence of strong increasing returns, as proposed by the new growth literature
(Romer, 1986; Grossman and Helpman, 1991), and rein- forced by the role of agglomeration
economies (Krugman, 1991)
empirical research has addressed the convergence issue in terms of income, productivity, and
more recently in technological capabilities. For some review studies and methodological
assessments, see (Quah, 1996); (Petrakos & Artelaris, 2009); Bazo-Lopez et al. (1999);
(Arundel, Lorenz, Lundvall, & Valeyre, 2007) islam? And other recent materials
Composite indicators of innovation and technological capabilities have demonstrated they are
quite stable over time (Archibugi, Denni, & Filippetti, 2009b) can go to results
2.1.4.7 (Archibugi & Filippetti, 2011)explains convergence, can be
referred to for convergence examples and later in results. And as a
model for results
(Archibugi & Filippetti, 2011)
two different methodologies already used to address convergence in the growth literature (Barro
& Sala-i-Martin, 2004). Both rely on the simple concept that, in case of convergence, lagging-
behind economies tend to grow faster than the best performer. The first model is usually referred
to as the ‘beta-convergence model’ and takes into account only the first and last years – in our
case 2004 and 2008, respectively. We use the following equation for the beta-convergence
model:
where the dependent variable represents the entire period variation rate (2004–08), a is a
constant, y0,I is the initial value (at time 0) relative to country i, and e is the error term. We run
eight different regressions for this model – one relative to the SII index, and the other relative to
the seven sub-indexes which feed into the SII (see Appendix Table A1). Thus in the first case y
represents the SII Index, while in the other cases it represents the sub-indexes, as for example,
‘Human Resources’, ‘Finance and Support’ and so on. This allows us to check the presence of
beta-convergence relative to the global innovation performance, as measured by the SII Index,
and relative to the seven innovation dimensions in the considered period. If the parameter b is
significantly negative, one can conclude in favor of unconditional beta-convergence.
In Table 2 we report the results of the beta-convergence model relative to the seven EIS
dimensions. Also in this case, coefficients have negative and significant signs with the only
exception being the ‘Innovators’ dimension.8 Our results also show that ‘Finance and Support’,
which includes public R&D, venture capital, private credit and broadband, and ‘Throughputs’,
which include patents, trademarks, design registrations and the technology balance of payments,
are the two dimensions in which convergence occurs at a faster rate. (can go to my results)
 2.1.4.8 Imp, Castellacci & Natera, 2015, convergence paradox,
techno-economic, socio-institutional
results point out the existence of a convergence paradox: national systems worldwide have become more similar in
terms of their socio-institutional framework but increasingly more different with respect to their techno-economic
pillars.(Castellacci & Natera, 2015)

The study identifies six main dimensions, three of which are related to the techno‐economic domain (innovation and
technological capabilities, openness, and infrastructures), while the other three refer to countries’ socio‐institutional
system (education, political institutions, and social cohesion).

that are also the same as freeman and perez and abramovich

2.1.4.9 2011, The Convergence Paradox: The Global Evolution of

National Innovation Systems
Fulvio Castellacci* and Jose Miguel Natera†

Its dimensions are then presented in CANA dataset using multiple imputations.

Method of Multiple Imputation Honaker and King can be applied to avoid missing values problem. As in
(Castellacci & Natera, 2011) And it’s a good reference for innovation systems measurement

The underlying convergence paradox is still the same as the productivity paradox of solow, the world is converging
in terms of modern technologies and education but its not converging in terms of income.

2.1.4.10 Castellacci & Natera, 2016 the convergence paradox,

again dividing the system into techno-economic and socio-
institutional sides,, whether it’s a stylised thing or a real distinction?
results point out the existence of a convergence paradox: national systems worldwide have
become more similar in terms of their socio-institutional framework but increasingly more
different with respect to their techno-economic pillars(Castellacci & Natera, 2016)
The study identifies six main dimensions, three of which are related to the techno‐economic domain (innovation and
technological capabilities, openness, and infrastructures), while the other three refer to countries’ socio ‐institutional
system (education, political institutions, and social cohesion).

that are also the same as freeman and perez and abramovich

The Convergence Paradox: The Global Evolution of National Innovation Systems

Fulvio Castellacci* and Jose Miguel Natera† Its dimensions are then presented in CANA dataset using multiple
imputations.

Footnote

Method of Multiple Imputation Honaker and King can be applied to avoid missing values problem. As in
(Castellacci & Natera, 2011). And it’s a good reference for innovation systems measurement

The underlying convergence paradox is still the same as the productivity paradox of solow, the world is converging
in terms of modern technologies and education but its not converging in terms of income. (technology is here, where
is the productivity, maybe every industrial revolutions does not bring about productivity changes in the same way,
even today those excelling in mass production era technologies have been able to use the IT revolution, maybe the
fourth industrial revolution can bring about some change.

Footnote

And adds to cluster analysis, regression tree (CART) analysis, these can be done with my work. Is between 1990
and 2000.. mine adds to it. (Castellacci & Archibugi, 2008)

The paradox…. cross-country distributions of technological infrastructures and human capital have experienced a
process of convergence, whereas the innovative intensity is characterized by increasing polarization between rich
and poor economies. Thus, while the conditions for catching up have generally improved, the increasing innovation
gap represents a major factor behind the observed differences in income per capita (Castellacci, 2011).. there are
some changes in innovation gap and absorption gap, tertiary isn’t absorptive any more but innovation, internet was
but isn’t innovation.. least developed have also started publishing, the patenting gaps remain, internet and mobiles
have murged, and changes in clusters, fewer left in the marginalized,

the great diversity of countries’ characteristics and growth behavior, our six cluster search is based on this
(Castellacci, 2011)

techno-economic and socio-institutional in innovation systems (and in mainstream) over laps with innovation
capability and absorptive capacity in technology gap tradition.

The huge economics literature flourished in the last couple of decades on the subject broadly falls into two distinct
research traditions, namely the mainstream R&D spillovers approach and the evolutionary economics view.
traditional view of economic policy based on a market-oriented approach, the evolutionary view is on the contrary
consistent with the idea that institutional arrangements and policy interventions do indeed play a fundamental role
for shaping innovation patterns and their impacts on the competitiveness of industries

we could check the economic policies of nations (reviewing academic and govt policy documents) and see which
tradition has more influence and whether it has something to do with successful catching up.

To stand on the shoulders of the giants, is to make use of the vast amount of analysis of technological capabilities,
technology clubs and their convergence behaviors through 90s (Castellacci, 2006), (Castellacci & Archibugi, 2008).
There is a great opportunity to extend the analysis to the recent and most happening period of technological
development i.e. 1995-2015. This period has been of the fast diffusion of recent innovations, rise of emerging
economies, even termed as the end of the great divergence
 2.1.4.11 Archibugi & Coco, 2004 ARCO index, does spill over occur
automatically
(Archibugi & Coco, 2004)
(Barro & Sala-i-martin, 1992) technology spill-overs do not occur automatically.

In order to assimilate knowledge from abroad, a country must be able" to apply this knowledge in its own economic
system. 'learning capability' depends on an 'intrinsic' learning capability (depending on such variables as the
education of the labour force and the quality of the infra-structure),

besides a catching up phase, there is a also a 'pre-catching up phase', in which a country builds up its intrinsic
learning capability, and

a 'post-catching up phase' in which domestic research activities begin to assume a greater importance than
technology spill-overs. education is indeed an important factor in the catching up process,

Can relate with Narullah,, the stages assumptions

therefore we follow the most researched and repeatedly assessed index, using single source,
available data. With minor modification, trying to ensure continuity and comparability of older
index, extending the analysis to 1990,
departures include separating old and new innovations i.e. mobile phones and telephones, (to test
the theory of older innovations and to the ultimate development of mobiles as smart phones and
internet devices becoming more closely associated with penetration of internet) to highlight the ,
and using simpler indicators such as patent applications by residents, enrolment in tertiary
enrolment rather than tertiary in science and engineering. considering strong correlation with the
arco index as sufficient justification.
Measuring 25 years of technology revolution expansion on a global scale,

2.1.4.12 (Filippetti & Peyrache, 2011) a very similar paper,

objectives’ language..
(Filippetti & Peyrache, 2011)

two issues have persistently interested the community of scholars studying the technological capabilities of
countries: (i) how to provide an overall measure of technological capabilities at the national level, aggregating
different dimensions (variables) (Grupp & Schubert, 2010); OECD, 2007) and (ii) the global dynamic of technology
and in particular whether a process of global convergence is occurring, or instead a club of a few advanced countries
is still responsible for the major production of technology and innovation (Archibugi & Iammarino, 2002);
(Kemeny, 2010).

Scholars working in this field have eventually to face the Hamletic choice between the number of countries on the
one hand, and the number of the variables on the other, to be included in the dataset(Filippetti & Peyrache, 2011)we
have better data now and don’t have to sacrifice one for another

global product sharing networks?

 2.1.4.13 Mainstream clubs and convergence
2.1.4.14 (Quah, 1996) emerging twin peaks of convergence clubs
needs review
(Quah, 1996) emerging twin peaks of convergence clubs And (Quah, 1997), ideas determining convergence clubs
(Quah, 1999)

The club convergence movements of the 1980s and 1990s, when groups of poor and rich
countries converged to two separate points, was followed by a de-clubbing movement after the
turn of the millennium (Krause, 2016)
literature on convergence (e.g. Barro, 1991; Barro and Sala-i-Martin, 1992; Mankiw et al., 1992;
Sala-i-Martin, 1996; Galor, 1996; Jones, 1997; Graham and Temple, 2006)
2.1.4.15 Critisism on Quah twin peaks, there may be three peaks,
rather just components..(Vollmer, Holzmann, & Schwaiger, 2013)
Critisism on Quah twin peaks, there may be three peaks, rather just components..(Vollmer et al.,
2013)
It is controversial in this literature whether the twin peaks represent locally stable
equilibria/convergence clubs (Quah, 1996) or whether they are only a temporary phenomenon
caused by a high frequency of growth miracles (Jones, 1997).
The unified growth theory (c.f. Galor, 2010 for an overview)
The theory suggests that growth segments economies into three fundamental regimes: a
Malthusian regime with slow growing economies, fast growing economies in a sustained growth
regime, and a third group in the transition from one regime to the other. One important difference
to models with multiple equilibria is that this segmentation does not represent the long-run
steady state of these economies. Variations in the levels of income only reflect country-specific
characteristics and not the actual stage of development. Thus, there are no critical levels that
permit economies to switch from one regime to the other, but rather critical rates of progress.

A three-clubs convergence seems to emerge. (Pittau, Zelli, & Massari, 2016)

The emergence of more than one mode in per capita income distribution has been interpreted as
the formation of “convergence clubs”, groups of countries that converge locally but not globally.
bi-modality has been usually detected, this phenomenon is referred to as “two-clubs” or “twin-
peaks” convergence (Quah, 1993, 1997; Jones, 1997; Henderson and Russell, 2005). A

2.1.4.16 Henderson and Russell, 2005, twin peaks

(Henderson & Russell, 2005)
Using nonparametric, production-frontier methods, we decompose labor pro-ductivity growth
into components attributable to technological change (shifts in the world production frontier),
technological catch-up (movements toward or away from the frontier), and physical and human
capital accumulation (move- ments along the frontier). We find that (1) technological change is
decidedly nonneutral, (2) productivity growth is driven primarily by physical and human capital
accumulation, (3) the increased international dispersion of productivity is explained primarily by
physical capital accumulation, and (4) international po- larization (the shift from a unimodal to a
bimodal distribution) is brought about primarily by efficiency changes (technological catch-up).
Kumar and Russell (2002) (hereafter KR) employ (deterministic) production-frontier methods3
to analyze international macroeconomic convergence. In particular, they decompose the labor-
productivity growth of 57 industrial, newly industralized, and developing countries into
components attributable to (1) technological change (shifts in the world production frontier), (2)
technological catch-up (movements toward or away from the frontier), and (3) capital
accumulation (movement along the frontier).
2.1.4.17 Evidence of Convergence Clubs Using Mixture Models
(Pittau et al., 2016)
(Pittau et al., 2016)Cross-country economic convergence has been increasingly investigated by
finite mixture models. Multiple components in a mixture reflect groups of countries that
converge locally. Testing for the number of components is crucial for detecting “convergence
clubs.” To assess the number of components of the mixture, we propose a sequential procedure
that compares the shape of the hypothesized mixture distribution with the true unknown density,
consistently estimated through a kernel estimator. The novelty of our approach is its capability to
select the number of components along with a satisfactory fitting of the model. Simulation
studies and an empirical application to per capita income distribution across countries testify for
the good performance of our approach. A three-clubs convergence seems to emerge. They use
kernel density estimators..

2.1.4.18 Convergence in concepts

It is important to note that these literatures are not necessarily at odds, and that some authors
have made important contributions to both streams. For example, Romer’s (1990) model of
endogenous technical change employs a concept of technology that is more abstract than that of
his historical essay examining the causes of the United States’ technical leadership in
manufacturing (1996). Like- wise, Abramovitz’s early growth accounting research (1956) was a
keystone for early formal models, though his later research on catch-up (1986) adopts a more
phenomenon-driven approach, e.g., proposing “technical congruence” as a notion to explain why
knowledge flows imperfectly across countries. 4 For additional elaboration, see also, Fagerberg
(1987, 1988) and Fagerberg and Verspagen (2002).
it will be argued that the neo-classical and the evolutionary approach are converging in the
Schumpeterian framework. The latter framework is developed in both classes of models as a
means for theorizing on technological change. A challenging task for further research is to
combine the fruitful insights of both the neo-classical and the evolutionary approach to improve
our understanding of complex processes of technological change in relation to other micro- and
macroeconomic processes(Mulder, De Groot, & Hof Kes, 2001) (José G. Vargas-Hernández,
2016)

2.1.4.19 The great divergence technology and income D. Comin &

Mestieri, 2018
Towards the end the question before the thesis statement or objectives
Periods of convergence and divergence is the same as technological revolutions
(D. Comin & Mestieri, 2018) If Technology Has Arrived Everywhere, Why Has Income Diverged ?
Great Divergence.—Next we study the evolution of productivity growth for the 1765–2000 period (see Figure 4).
Despite that the acceleration in the growth rate of the frontier starts in 1765, the growth rate of the Western countries
remains at its pre-industrial level until around 1830 due to the long initial adoption lags. At this point, Western
economies benefit from the higher productivity embodied in industrial technologies and experience a gradual
acceleration in productivity growth. By 1900, Western economies have reached the steady state growth rate of 2
percent.61 Growth in the non-Western economy does not take off until approximately 1870. After that, it accelerates
at a slower pace than the average Western economy. By year 2000, it is still 1.5 percent. Figure 4, panel A shows the
gap in productivity growth between Western and non-Western economies. The gap in growth rates between Western
and non-Western economies is considerable. The average annual growth rate is 0.6 percentage points lower in non-
Western countries over a period of 180 years. The gap peaks around 1913 at 1 percent. From then on, the gap
declines monotonically until reaching 0.6 percent by 2000.

(D. Comin & Mestieri, 2018) the cross-country evolution of technology diffusion over the last two centuries by.
document that adoption lags between poor and rich countries have converged, while the intensity of use of adopted
technologies of poor countries relative to rich countries has diverged. The divergence in intensity of use accounts for
the divergence during the twentieth century . that infact a reduced adoption lag of merely the modern
technologies doesn’t mean convergence, it’s the intensity of use, (electricity consumption, mass
production, e-commerce and e-government)
(D. Comin & Hobijn, 2010) each country benefits from knowledge created elsewhere in the world, but quantifying
these benefits is difficult. (Eaton & Kortum, 1999) suggest that only 60% of US growth in recent decades comes
from knowledge created in the United States, and the numbers for local knowledge in Japan (35%) and the United
Kingdom (13%) are even smaller. A related fact courtesy of (R. B. Freeman, 2009)is this: In the 1970s, China
produced a negligible number of Ph.D.’s in science and engineering, but by 2010, China was producing 26% more
than the United States.

development is shown to be a process of alternating periods of convergence and divergence,

with some signs of a shift towards divergence recently. We also show that the importance of
innovation for economic growth has increased lately, while at the same time imitation, (or
diffusion) has become more demanding.(Fagerberg & Verspagen, 2002)

Despite the economic and technological convergence associated with economic globalization, technological
specialization patterns are distinct across countries (Dunning & Narula, 1996)

knowledge infrastructure’ in the sense proposed by (Smith, 1997) as being ‘generic, multi-user and indivisible’ and
consisting of public research institutes, universities, organisations for standards, intellectual property protection, etc
that enables and promotes science and technology development

Second, there are institutions that a sort of a ‘culture’ of innovation and therefore influence the dynamics of the
learning process (Narula, 2002).

Global dimension of Innovation Systems Linking Innovation Systems and Global Value
Chains(Morrison, Pietrobelli, & Rabellotti, 2007)(World Bank, OECD, 2017)(Fagerberg,
Lundvall, & Srholec, 2018)(Pietrobelli & Rabellotti, 2011)
The Global dimension of Innovation Systems Linking Innovation Systems and Global Value
Chains

2.1.5 absorptive capacity, one of the merged fields, relevant to developing nations, and
merges thresholds and revolutions distance to frontier or technology gap tradition
borrowed it from convergence lit and happily applied it.
How it relates to convergence debate, the interaction of technological and social capability for
economic convergence,..
Ohkawa and Rosovsky (1973) note this explicitly, and characterize the ability to assimilate
external technologies as “social capability.” Consistent with the argument that specific
investments in innovative capabilities are es- sential for assimilating new-to-the-country
innovation, (Abramovitz, 1986) proposes that countries whose eco- nomic environments more
closely match that of the leader country will have better “technological congruence” and will,
thus, be more successful in incorpo- rating advances made elsewhere. (Lall, 1992) reasoning is
of course very similar to that of Abramovitz (see the discussion above of “social capabilities”).
Thus, technological and social capabilities should be expected to interact in the development
process. Moreover, by closer examination it becomes evident that there is a considerable overlap
between these two concepts.
Absorptive capacity is a fairly old concept, (Gerschenkron, 1963) and (Kuznets, 1973) identified
that the expense of R&D and human capital may obstacle the absorption. In explaining the
process of catching-up (Abramovitz, 1986) (Abramovitz & David, 1995) (Abramovitz, 1986)
pointed out that whether backward countries would benefit from the advantage of backwardness
depended on their social competence or social capacity and technological level. But the modern
variant of the concept emerged at the firm level (Cohen & Levinthal, 1989), (Levinthal, 1990) as
the ability to exploit modern technology. In 1995 Abramovitz divided these social factors into
two categories. One category includes basic social and political systems, and the other category
referred to absorptive capacity is composed of factors deciding the national capacity for
absorbing and digesting foreign advanced technology. (Abramovitz & David, 1995) distinguished
between two classes of elements. One class includes the “basic social attitudes and political institutions”, the other
consists of elements that determine the ability of countries to efficiently absorb and internalise knowledge
potentially available at the frontier, i.e., from the lead countries. This latter group has been dubbed as ‘absorptive
capacity’. (Criscuolo, Narula, & Narula, 2001)

Innovation scholars (Dahlman & Nelson, 1995) defined it as the ability of a country to identify
and absorb technological knowledge generated outside the country, i.e. national absorptive
capacity. (Dahlman & Nelson, 1995)defined the national absorptive capacity as the ability to
learn and use the advanced technologies and experience from developed countries.
Dahlman & Nelson, (1995) define national absorptive capacity as “the ability to learn and
implement the technologies and associated practices of already developed countries”. National
absorptive capacity is more than the sum of the absorptive capabilities of domestic firms.
Absorptive capacity is fundamentally different from the capability to absorb: the latter always
increases, whereas the former is a function of the amount of knowledge that remains to be
assimilated (Narula, 2004).
absorptive capacity implies problem-solving skills that emerge directly as a result of attempts to
assimilate external knowledge. These efforts represent a potential for learning how to undertake
different activities through investing in R&D, i.e. to create new knowledge, and is referred to as
the process of ‘learning to learn’ (B.-Å. Lundvall, 1992)
To evaluate and utilize outside knowledge is largely a function of the level of prior related
knowledge” ((Levinthal, 1990): 128).
absorptive capacity represents a subset of technological capabilities, Much of the extant work at both the macro-
level and micro-level correctly considers it axiomatic that the primary determinant behind technological
accumulation and absorptive capacity is human capital. Human capital represents a subset of absorptive capabilities,
Absorptive capacity is therefore also concerned with the efficient use of knowledge acquired.

To implement technologies invented abroad, however, requires that more skills must be built up by domestic
workers and managers – the absorptive capacity of the economy.

Hence, both trade and R & D spillover effects are tied to the availability of human capital - the absorptive capacity.
((Keller, 1996)). (Zahra & George, 2002), (Flatten, Engelen, Zahra, & Brettel, 2011)., Review of the AC concept but
its solely focused on firm level analysis and strategy.

macro-level literature on international R&D spillovers largely tends to concentrate on trade-related spillovers (e.g.,
Keller 1997, Coe and Helpman 1995, 1997, Verspagen 1997)

the concept of national absorptive capacity has so far been associated in the international technology transfer
literature with the concept of national technological capabilities, and in the endogenous growth literature with the
concept of human capital ((Lucas, 1988), and (Paul M. Romer, 1990))
Absorptive capacity is significant for development because it allows domestic economic actors (firms and
institutions) to internalize knowledge that exists elsewhere (either within the domestic economy or externally) that is
made available directly or indirectly to them (Narula, 2004).

current evidence is unanimous in asserting a strong correlation between economic growth and the absorptive
capacity (Narula, 2004)

However, few scholars carried out further research on the national absorptive capacity because of
the difficulty in the macro study. Therefore the national absorptive capacity is considered as
"black box".(L. Kim, 1997) There is considerably less work on understanding the nature of
absorptive capacity on the national level (Narula, 2004).

For related reasons, (Bell & Pavitt, 1993) argue that investments in innovative capacity are
essential for catch-up in developing countries, as investments in production equipment alone are
insufficient for incorporating technical advances made elsewhere.
the human capital represents a core aspect of absorptive capacity, its presence is also not a
sufficient condition for knowledge accumulation. This requires the presence of institutions and
economic actors lack of appropriate incentives for production and investment can compromise
the success of the technological upgrading (Lall, 1992)
example, several empirical studies have in fact used human capital measures as proxies for
absorptive capacity (see (Barro & Sala-i-martin, 1992)and (Borensztein, Gregorio, & Lee, 1998).
Other being infrastructure and industrial structure
the competence “…to evaluate and utilize outside knowledge is largely a function of the level of
prior related knowledge(older innovations and path dependence)” ((Levinthal, 1990): 128).
Which may also be true for diffusion of old innovations
absorptive capacity and productivity growth we should bear in mind the importance of the
minimum required level of absorptive capacity (thresholds of ac, thresholds also mentioned in
technology gap) government policies The importance of institution-creation cannot be
overstated: (Rodrik, Subramanian, & Trebbi, 2002) demonstrate that efficient institutions
contribute more to economic growth than location or trade.
The role of governments as a market facilitator and provider of complementarily created,
location-specific assets is more critical (Narula & Marin, 2003)
Despite the economic and technological convergence associated with economic globalization,
technological specialization patterns are distinct across countries (Dunning & Narula, 1996)
Following (Criscuolo et al., 2001) we stipulate the existence of four stages of economic
development in terms of ability to accumulate knowledge as follows: the pre catching-up stage,
the catching-up stage, the pre frontier- sharing stage and the frontier-sharing stage. Some general
characteristics of countries in each stage are presented in
 2.1.5.1 narula,2001 Stages of absorptive capacities
Pre catching-up stage: Natural resource-based, commodity exports. No technological capabilities. Little or no basic
infrastructure. Underdeveloped institutions Few domestic firms with technological capabilities. Little or no inward
FDI. No outward FDI.

Catching-up stage: “Generic” basic infrastructure. Growing capacity to imitate. Engaged in low-value- adding
manufacturing, often as OEM supplier. Growth of domestic industry in support and related sectors. Little outward
FDI. Growing inward FDI.

Pre frontier-sharing stage: Increasingly specialized knowledge infrastructure. Decline in potential to imitate and
adapt. Increasing integration into efficiency-based global production networks. Strong domestic industry, move
towards OBM. Increasing use of networking to achieve modularity. Rising inward FDI, Rising outward FDI.

Frontier-sharing stage: Technological opportunities primarily rest on long- term innovation and collaboration.
Pushing back frontiers of knowledge. Considerable in-house R&D activity by both domestic and foreign MNEs.
Outward FDI to augment domestic capacity. Growing use of R&D alliances and networking. Strong knowledge
infrastructure.

Growing use of outsourcing to earlier- stage countries of lower-value added activities. High outward and inward FDI
stocks.Technological and absorptive capabilities Economic structure Industrial upgrading and manufacturing
comparative advantage evolution Growing use of outsourcing to earlier- stage countries of lower-value added
activities.

High outward and inward FDI stocks. country approaches the frontier, absorptive capacity declines both because the
knowledge available to be assimilated is smaller and the complexity involved in its exploitation is higher. Note that
regardless of whether we use a fixed or moving frontier, absorptive capacity will tend to zero as the country
approaches the frontier, as Figure 6.1 shows. However, the capability to absorb reaches a maximum at the frontier,
and may be said to be monotonically related to knowledge accumulation as in Figure 6.2. In other words, at the
frontier, it is theoretically possible to absorb more knowledge, since the capability to absorb can only increase with
knowledge accumulation, but absorptive capacity is an inverse function of the available unlearned knowledge. 

2.1.5.2 accumulation of prior knowledge, locked out

(Levinthal, 1990) ability to exploit external knowledge is thus a critical component of innovative capabilities, prior
related knowledge confers an ability to recognize the value of new information, assimilate it, and apply it to
commercial ends, a byproduct of a firm's R&D investment, manufacturing operation.

Prior knowledge permits the assimilation, and exploitation of new knowledge

Accumulating absorptive capacity in one period will permit its more efficient accumulation in the next

Second, the possession of related expertise will permit the firm to better understand and therefore evaluate the
import of intermediate technological advances that provide signals as to the eventual merit of a new technological
development.

The lack of early investment in absorptive capacity makes it more costly to develop a given level of it in a
subsequent period. of firms being "locked-out

brief intro to stages here and details in lit.

Stages: there are diminishing returns on marginal increases in absorptive capacity as firms approach the frontier of
knowledge (Narula, 2004). The frontier is defined as the set of all production methods that at a given point in time
are the most efficient in the world.
(Criscuolo & Narula, 2008) a relationship between the ability of a country to absorb foreign knowledge and its stage
of technological development. non linear relationship between national absorption capacity and the technological
gap

(Criscuolo et al., 2001) highlight the importance of national absorptive capacity and knowledge accumulation. By
aggregating upwards from firm level they specify the relationship between the ability of a country to absorb foreign
knowledge and its stages of technological development.(ignores interntional or global systems, global dynamics of
technological revolutions)

links absorptive capacity and the technology gap arguing that a cumulative and interactive process between these
two variables commences only if an “adequate” minimum knowledge base is initially present.

2.1.5.3 Caslassci 2013 coevolution between ac and ic,

The dynamics of national innovation systems: A panel cointegration analysis of the coevolution
between innovative capability and absorptive capacity. Research Policy,
(Castellacci & Natera, 2013) and and b are the same.. check

coevolution of two main dimensions: innovative capability and absorptive capacity

General result does however differ and take specific patterns in national systems characterized by different levels of
development.

that poor countries due to lack of absorptive capacity are much less likely than other countries to benefit from
foreign direct investments

Absorptive capacity, to be cited after narula, also cite in mainstream economics approaches like technology-gap,
distance to frontier, .,

Relationship with technology gap

Secondly, technology-gap models (vs new growth theory) highlight the important role played by countries’
absorptive capacity for imitation-based catching up, and show the large set of factors that contribute to define a
country’s absorptive capacity ((Abramovitz, 1986); (Barro & Sala-i-martin, 1992); (Godinho, Mendonça, & Pereira,
2006); (Fagerberg & Srholec, 2008); (Lee & Kim, 2009).

theoretical models in the technology-gap (or distance-to-frontier) tradition have developed a more stylized notion of
absorptive capacity, and often focused on human capital as the single most important factor shaping a country’s
capability to imitate and absorb foreign advanced technologies (Nelson and Phelps, 1966; Verspagen, 1991;
Benhabib and Spiegel, 1994; (Papageorgiou, 2002); (Stokke, 2008)).

On the other hand, empirical works in this tradition have typically followed a growth-regression econometric
approach, and shown the large variety of factors, of both a techno-economic and socio-institutional nature, that
affect convergence and divergence patterns in broad cross-country samples (Fagerberg & Verspagen, 2002);
(Fagerberg & Srholec, 2007); (Fagerberg & Srholec, 2008); (Castellacci & Archibugi, 2008); (Lee & Kim, 2009))

Specifically, threshold externalities models are based on the idea that the interactions between countries’ R&D and
innovation activities, on the one hand, and human capital and imitation activities, on the other, may generate
different country clubs, and explain the transition of each national system from one stage of development to a more
advanced one (B. P. Howitt, 2000); (Galor, 2004); (Aghion, Howitt, & Mayer-Foulkes, 2005) (Acemoglu & Aghion,
2006); (Maurizio Iacopetta, 2010)
 2.1.5.4 Castellaci objectives
In particular, these models argue that the key to explain countries’ shift from an imitation to an innovation stage is
the return to investment in human capital: this tends to grow during the development process, thus making it
progressively more profitable for individuals to invest in education and, hence, sustaining further technological
progress in the future. Despite its highly stylized character, this idea provides an important step forward in the
theory of innovation and growth, since it implicitly points out the two-way interactive relationship that links
the dynamics of innovation and absorptive capacity in the long-run only a limited number of studies have
empirically investigated the dynamics of innovative capability over time and the main factors that may
explain its long-run evolution ((Furman et al., 2002); (Varsakelis, 2006); (Filippetti & Peyrache, 2011)). This
is a crucial task for future research in this field.

Main objectives come from here, two sides or factors and thresholds. Gap and significance, Check references of
these papers and see their origin they are mostly econometric in nature. Return on investment in old innovations
along with human capital. Limitation is that it ignores the least developed nations, the bottom threshold.

What is the level of threshold as a guide to policy paper, besides where we stand in relation to other nations and
how we are moving

The dynamics and multifaceted nature of absorptive capacity. Although the concept of absorptive capacity was
initially meant to define a broad and multidimensional set of capabilities, modeling and empirical exercises have
often provided a rather stylized and simplified operationalization of it. As recently argued by (Steinmueller, 2017)
(Archibugi & Coco, 2004), (Godinho et al., 2006) and (Fagerberg & Srholec, 2008), it is indeed important to adopt a
multifaceted description and measurement of the various factors that contribute to shape the absorptive capacity of
nations.

2.1.5.5 Castellacci(Castellacci & Natera, 2013)

(Castellacci & Natera, 2013)The lack of focus on dynamic aspects is partly explained by the non-availability
of time series data for a sufficiently long period of time, and partly by the analytical and methodological difficulties
that are faced when it comes to model and empirically analyze the dynamics of complex evolving systems (Foster,
1991).

2.1.5.6 (Castellacci & Natera, 2013) pieces of intro and lit earlier..
(Castellacci & Natera, 2013)..The dynamics of national innovation systems: A panel cointegration
analysis of the coevolution between innovative capability and absorptive capacity
the coevolution of two main dimensions: innovative capability and absorptive capacity. The empirical analysis
employs a broad set of indicators measuring national innovative capabilities and absorptive capacity for a panel of
87 countries in the period 1980–2007, and makes use of panel cointegration analysis to investigate long-run
relationships and coevolution patterns among these variables. The results indicate that the dynamics of national
systems of innovation is driven by the coevolution of three innovative capability variables (innovative input,
scientific output and technological output), on the one hand, and three absorptive capacity factors (infrastructures,
international trade and human capital), on the other. This general result does however differ and take specific
patterns in national systems characterized by different levels of development

2.1.5.7 (Castellacci & Natera, 2013)

(Castellacci & Natera, 2013)

Our empirical analysis makes use of a broad set of indicators measuring national innovative capabilities and
absorptive capacity for a panel of 87 countries in the period 1980–2007. The empirical methodology that we adopt is
rooted in the panel cointegration approach, which represents a recent extension of the time series cointegration
analysis of non-stationary variables to the panel data context (Hatch & Mackey, 2002). The cointegration
methodology has an inherent ability to uncover dynamic relationships among variables that coevolve over time, and
we therefore argue that it constitutes a natural platform for investigating the long-run dynamics of national systems
of innovation.

The empirical results indicate that innovative capability and absorptive capacity variables are indeed linked by a set
of long-term structural relationships over the period 1980–2007. Specifically, the dynamics of national systems of
innovation is driven by the coevolution of two sets of factors: innovative input, scientific output and technological
output, on the one hand, and infrastructures, international trade and human capital, on the other. Further, both of
these dimensions coevolve with the growth of income per capita.

However, we also find that these general results differ across country groups and take specific patterns in national
systems characterized by different levels of development.

According to (Abramovitz, 1986), (Fagerberg, 1994)absorptive capacity may refer to both techno-economic
characteristics (technological congruence) such as “the resource availabilities, factor supplies, technological
capabilities, market scales and consumer demands”, as well as socio-institutional conditions (social capability) like
“countries’ level of education and technical competence, the commercial, industrial and financial institutions that
bear on their abilities to finance and operate modern, large-scale business, and the political and social characteristics
that influence the risks, the incentives and the personal rewards of economic activity” (Moses Abramovitz, 1994):

Inspired by these original insights, theoretical models in the technology-gap (or distance-to-frontier) tradition have
developed a more stylized notion of absorptive capacity, and often focused on human capital as the single most
important factor shaping a country’s capability to imitate and absorb foreign advanced technologies (Nelson &
Phelps, 1966); (Barro & Sala-i-martin, 1992); (Benhabib & Spiegel, 1994); (Papageorgiou, 2002); (Stokke, 2008)).

On the other hand, empirical works in this tradition have typically followed a growth-regression econometric
approach, and shown the large variety of factors, of both a techno-economic and socio-institutional nature, that
affect convergence and divergence patterns in broad cross-country samples (e.g. Fagerberg and Verspagen, 2002;
Fagerberg et al., 2007; Fagerberg and Srholec, 2008; Castellacci, 2008; Lee and Kim, 2009).2 Most of this
empirical research, however, has so far focused on the cross-country comparative aspect (“why growth rates differ”)
and mostly neglected the time series dimension and the analysis of the dynamics of the technological catch up and
economic growth process over time. A more explicit investigation of the dynamic dimension is provided by a
recent class of theoretical models in the distance-to frontier tradition, which point out that the existence of may
explain the cumulative nature of the process of technological accumulation and economic growth in the long-run.

Specifically, threshold externalities models are based on the idea that the interactions between countries’
R&D and innovation activities, on the one hand, and human capital and imitation activities, on the other,
may generate different country clubs, and explain the transition of each national system from one stage of
development to a more advanced one (Galor, 2004); (P. Howitt & Mayer-Foulkes, 2002); (Acemoglu &
Aghion, 2006); (Maurizio Iacopetta, 2010)). In particular, these models argue that the key to explain
countries’ shift from an imitation to an innovation stage is the return to investment in human capital: this
tends to grow during the development process, thus making it progressively more profitable for individuals to
invest in education and, hence, sustaining further technological progress in the future. Despite its highly
stylized character, this idea provides an important step forward in the theory of innovation and growth, since
it implicitly points out the two-way interactive relationship that links the dynamics of innovation and
absorptive capacity in the long-run only a limited number of studies have empirically investigated the
dynamics of innovative capability over time and the main factors that may explain its long-run evolution
(Furman et al., 2002); (Varsakelis, 2006); (Filippetti & Peyrache, 2011). This is a crucial task for future
research in this field.
 2.1.5.8 The dynamics and multifaceted nature of absorptive
capacity.
Although the concept of absorptive capacity was initially meant to define a broad and multidimensional set of
capabilities, modeling and empirical exercises have often provided a rather stylized and simplified
operationalization of it. As recently argued by Archibugi and Coco (2004), Godinho et al. (2006) and Fagerberg and
Srholec (2008), it is indeed important to adopt a multifaceted description and measurement of the various factors
that contribute to shape the absorptive capacity of nations.

Further, it is crucial to investigate the dynamics and long-run evolution of absorptive capacity, rather than simply
regarding it as a set of exogenous control factors in cross-country growth regression exercises.

the opposite causation mechanism – linking countries’ absorptive capacity to their innovation capability – has not
been investigated to the same extent. This paper argues that, adopting a time series perspective, it is important to
investigate the existence of a two-way relationship (coevolution) that links together the dynamics of these
dimensions in the long run.

2.1.5.9 Old innovations, path dependence,

What we have learnt over time is that the technological path of a given industrial plant – and of a
country as well – is ‘evolutionary’ and has strong elements of time as well as being path-
dependent. Consequently investments made in the technologuies in the past influence heavily
what happens to firms and countries currently (Dosi et al., 1997).
2.1.5.10 Dynamics ac/tc, thresholds
the accumulation process proceeds at a slower pace as the country approaches the technological frontier. As a result
of the dynamic relationship between absorptive capacity and its distance from the frontier, we propose a S shaped
pattern for the stock of knowledge for a given country as it closes the gap with the leader.

considerable analysis has been undertaken on the national level (see e.g., (Barro & Sala-i-martin, 1992), and (Keller,
1996)) although this line of research has tended to approach the issue of technological accumulation with absorptive
capacity as a ‘black box’.

due to the opposite effects of the cumulativeness property of the learning process and the increase complexity of
external knowledge as the country approaches the technological frontier, (ignores technology life cycle, age)

the nature of absorptive capacity changes with stages of economic development,

importance of the different aspects of absorptive capability at different stages. the benefits that accrue from marginal
increases in absorptive capability change over time

(Borensztein et al., 1998) and (Xu, 2000) have shown that FDI has a positive impact on economic growth only in
those developing countries that have attained a certain minimum level of absorptive capacity. Knowledge
accumulation is much more rapid once the initial threshold level of absorptive capacity exists.

Simply put, technology absorption is easier, once countries have “learned-to-learn” (Criscuolo et al., 2001). The cost
of imitation increases as the follower closes the gap with the leader and the number of technologies potentially
available for imitation reduces. This implies that there are diminishing returns on marginal increases in absorptive
capacity as firms approach the frontier of knowledge (Narula & Marin, 2003).

four stages of knowledge accumulation: the pre- catching up stage, the catching-up stage, the pre-frontier-sharing
stage, and the frontier-sharing stage. Absorptive capacity supports further accumulation of technological knowledge,
and technological advances support the further development of absorptive capacity in a cumulative, interactive and
virtuous process during the catching-up stage. However, this virtuous circle of technological accumulation takes
place only if an “adequate” minimum level of absorptive capacity is initially present. Acquiring and sustaining this
threshold level of absorptive capacity occurs in the ‘pre-catching-up’ stage. As the country approaches the
technological frontier1, the accumulation process proceeds at a slower pace (‘the pre-frontier-sharing’ stage). The
assimilation of external knowledge becomes more difficult, both because of the complexity and the quantity of
knowledge than can be acquired. The main theoretical implication of such formulation is that national absorptive
capacity and the accumulation of knowledge stock are simultaneously determined and that absorptive capacity is not
constant along the convergent path: it evolves with the country’s technological development.2 Countries at different
stages of development will have different abilities to assimilate technological spillovers.

The existence of threshold level effects has been reported in empirical analysis on FDI and trade related R&D
spillovers.

(Romer, 1994) and (Cohen & Levinthal, 1997) report evidence of a similar threshold effect for the ability of a
country to benefit from spillovers generated by imports of machinery and equipment.

the accumulation process proceeds at a slower pace as the country approaches the technological frontier. As a result
of the dynamic relationship between absorptive capacity and its distance from the frontier, we propose a S shaped
pattern for the stock of knowledge for a given country as it closes the gap with the leader.

The role of governments as a market facilitator and provider of complementarily created, location-specific assets is
more critical (Narula & Marin, 2003)

Despite the economic and technological convergence associated with economic globalization, technological
specialization patterns are distinct across countries (Dunning & Narula, 1996)

This holds even when, as in the present case, country size is controlled for. The result is
consistent with previous research by Rodrik et al. (2004). It also accords with previous findings
by Xu (2000) and Dunning and Narula (2000) that poor countries due to lack of absorptive
capacity are much less likely than other countries to benefit from foreign direct investments.
Although a positive correlation between openness and growth is reported in some cases, the
degree of correlation is low, and sensitive to changes in the composition of the sample. Again, it
is among the richer economies that openness to trade and foreign direct investment seems to
matter most for growth.
2.1.5.11 Kemeny 2010 social capability
(Kemeny, 2010) (Does Foreign Direct Investment Drive Technological Upgrading) technology
upgrading from fdi, depends on economy’s level of social capability. But not for developed
nations as much as for developing

2.2 Technology revolutions the missing link,

2.2.1.1 Technological revolutions
Technological capabilities are composed of clusters of innovations associated with different
waves of industrial development (Freeman & Louta, 2001).
technological capability heterogeneous phenomenon, composed by several elements. Explicit
and Tacit, embodied and disembodied, technological and productive capabilities are strictly
interwoven (Archibugi et al., 2009b).
2.2.1.2 the literature on ‘long-waves’ and ‘technological
revolutions’.
What a wonderful convergence of these models with the convergence literature about periods of
convergence and divergence
This literature, which dates back (C. Freeman, 1982), (Kleinknecht, 1986), (Jacob J. van Duijn, 1981) (J.J. Van
Duijn, 1983) and (Hatch & Mackey, 2002)

The basic hypothesis (as we see it) is that the introduction times of important innovations are clustered in time. a
theory of technology driven growth, the role for other factors is vast. (Perez, 1983)and (Von Tunzelmann, 1995) are
particularly strong examples of contributions in which the notion of technological paradigms is linked to broad
institutional change, firm strategy or industry dynamics. Techno economic-socio institutional (Fagerberg, 1994)

This author used slightly different approach to understanding the relationship between technology and GDP.. Log
Liner relationship.. Time slops available in the paper if needed, what were the results…

2.2.1.3 Perez, 2013 dual opportunities

The article holds that the possibility is there for unleashing a golden age – national and global – by tilting the
playing field in favor of “green growth”.(Perez, 2013)

To obtain the maximum benefit from the enormous potential now available it is necessary for the state to actively
intervene in order to shape the space for market action, tilting the field in favour of social and environmental goals
and facilitating innovation and widespread investment across the planet. Identifying viable solutions, proposing
institutional innovations and making them a central part of the sort of progressive agenda that can garner widespread
support is, in my view, the more likely path towards achieving greater social justice(Perez & Rutherford, 2012)

Success in using new technologies depends on certain important complementary factors, such as dynamic
advantages and different types of externalities, especially the physical, social and technological infrastructure or the
existence of competent and demanding local clients.

These elements may have been built-up before with mature technologies, or they can be acquired through intensive
learning processes and investments in the improvement of the social and economic environment accumulating
technological and social capabilities through the use of mature technologies and then making use of that base for
gaining access to new and dynamic technologies, but this possibility depends to a large extent on the specific
opportunities created by the successive technological revolutions

New technologies of a revolutionary nature open up new opportunities for learning and catchingup.

The interaction of continuous and discontinuous technological changes explains why and how windows of
opportunity for development vary with time.

Existing mature industries neither remain unchanged nor passively coexist with the new industries. Each
technological revolution brings generic and all pervasive technologies, together with new organizational practices,
which significantly increase the potential productivity of most existing activities.

During paradigm transitions, however, there is an excellent opportunity for making a leap forward. The new generic
technologies and organizational principles can be applied in order to modernize and rejuvenate mature technologies
(and even traditional technologies (Toye & Perez, 2013)
 2.2.1.4 Perez 2003 Double Technological Opportunity
From a theoretical perspective, a very interesting interaction between the diffusion of old and recent innovations has
been identified in (Perez, 2003). Dubbed as the Double Technological Opportunity, it states that simultaneous
access to mature and generic technologies and organizational models creates opportunity (for the developing
nations) to rejuvenate mature technology and lead in the next paradigm. Technological advancement is a cumulative
process, and widespread diffusion of older innovations is necessary for adoption of later innovations. Older
innovations means the nation has been working on improving technological capacity for a long time.

High electricity consumption represents industrialization and urbanization. In this paper the separation of mobiles
from telephones would help distinguish among the nations having simultaneous access to both the technologies and
those having to wait for the next big wave.

2.2.1.5 growth”.(Perez, 2013)

.(Perez & Rutherford, 2012)

Success in using new technologies depends on certain important complementary factors, such as dynamic
advantages and different types of externalities, especially the physical, social and technological infrastructure or the
existence of competent and demanding local clients.

These elements may have been built-up before with mature technologies, or they can be acquired through intensive
learning processes and investments in the improvement of the social and economic environment accumulating
technological and social capabilities through the use of mature technologies and then making use of that base for
gaining access to new and dynamic technologies, but this possibility depends to a large extent on the specific
opportunities created by the successive technological revolutions

New technologies of a revolutionary nature open up new opportunities for learning and catchingup.

The interaction of continuous and discontinuous technological changes explains why and how windows of
opportunity for development vary with time.

Existing mature industries neither remain unchanged nor passively coexist with the new industries. Each
technological revolution brings generic and all pervasive technologies, together with new organizational practices,
which significantly increase the potential productivity of most existing activities.

During paradigm transitions, however, there is an excellent opportunity for making a leap forward. The new generic
technologies and organizational principles can be applied in order to modernize and rejuvenate mature

technologies (and even traditional technologies

(Toye & Perez, 2013)
2.2.1.6 Perez, 2013 potential that can be unleashed
The ongoing phase of the network age install a vast development potential that can be unleashed with adequate
government policies (Perez, 2013).

2.2.1.7 Fourth Industrial revolution, value chains Recent ideas

Albert 2018 Harnessing government’s role for the Fourth Industrial Revolution
And now the fourth revolution that combines all previous
The first three industrial revolution involved the use of steam and water power (in the mid-
1700s), then electricity and assembly lines (in the latter half of the 19th century), then
computerization (toward the end of the last millennium). Now, we are transitioning to the era of
the Fourth Industrial Revolution, also called FIRe in this Note. What makes the FIRe a
revolution is not the technologies that come along with it, as they (e.g., robots, computers, digital
platforms, wireless connectivity) have been around for some time. What makes this period
different is the interaction or fusion of these technologies in ways that have not been done
before. Although there is some disagreement whether FIRe is separate to, or an extension of
Industry 3.0, there is no debate about the disruptions it brings to industry and society (Rifkin
2016).
2.2.1.8 Intro, The fourth Industrial Revolution
(Schwab, 2017)
a paradigm shift is underway in how we work and communicate, as well as how we express,
inform and entertain ourselves. Equally, governments and institutions are being reshaped, as are
systems of education, healthcare and transportation, among many others. New ways of using
technology to change behaviour and our systems of production and consumption also offer the
potential for supporting the regeneration and preservation of natural environments, rather than
creating hidden costs in the form of externalities.
We must have a comprehensive and globally shared view of how technology is changing our
lives and those of future generations, and how it is reshaping the economic, social, cultural and
human context in which we live.
Velocity, an exponential rather than linear pace, breadth and width, builds on the digital
revolution and combines multiple technologies, Systems Impact: It involves the transformation
of entire systems (fits with tech revolutions, dual techn devlpt opportunity, technology
augmentation)

2.2.1.9 value chains

However, in current debates about development and technical change, innovation is often
represented as providing opportunities and conditions for developing countries to participate in
the world economy (Siyanbola, W., Egbetokun, A., Adebowale, B. A., & Olamade, 2016). (see
for instance (Marjolein C.J. & Henny A, 2007); (Fagerberg & Godinho, 2006). Innovation is
seen as a potential way in which low-income countries can strengthen their firms’ competitive
position within global value chains (Gereffi et al., 2005; Kaplinsky, 2000).
Global Value chains an addition to other sources of technology transfer, diffusion and spillover
(such as trade, FDI and ). Finds little evidence of LDCs development from joining GVCs. Seen
as a risk, a risk of automation rendering people jobless, how similar to previous ones.
Co-evolution of global value chains and innovation systems (Lema, Rabellotti, & Gehl Sampath,
2018)
Combining or coevolution between global value chain and innovation system approaches, for
investigating the interaction between the two in a dynamic perspective with multiple trajectories.
We find that, in some cases, there is an improvement in local innovation capabilities with
potentially positive effects on overall competitiveness, while in others there is little progress or
even a loss of previous innovation capacity.

2.3 The convergence literature (catching-up, growth)

Source of many technology gap concepts naturally because it is about change, relative change and also a direct
user of the technology related concepts in the theory of economic growth and development.

This insight is at the heart of our best candidate explanations for answering the question of why some countries are
so much richer than others. Development accounting tells us that poor countries have low levels of inputs, but
they are also remarkably inefficient in how they use those inputs. Misallocation provides the theoretical connection
between the myriad distortions in poor economies and the TFP differences that we observe in development
accounting

2.3.1.1 Islam, 2003 review of convergence debate

(Islam, 2003) The research on convergence has established new stylized facts regarding cross-country growth
regularities. It has brought to fore the existence of large technological and institutional differences across countries
and has given rise to new methodologies for quantifying and analyzing these differences. This is providing a new
information base for analysis of technological and institutional diffusion and for further development of growth
theory in general.

2.3.1.2 Periods of convergence and divergence, short cycle.

Paradigm shifts
prominent students of long-run growth (Hatch & Mackey, 2002), technological catch-up is not a question of
replacing an outdated technological set up with a more modern one, but to continually transform technological,
economic and institutional structures.

capitalist development is not necessarily a convergence process, as some theories in this area predict. Rather, it is
likely to be a process of alternating periods of convergence and divergence as the evidence presented in Section 3
indeed suggests. For instance, there are now signs of a diverging trend emerging in the global economy (after a
relatively long period of essentially converging trends).

Technologies and institutions change through time, and what drives economic growth in one era (e.g. economies of
scale in relation to mass production) might become much less important, or substituted by a different factor (e.g.
network economics) in a different era. In terms of economic growth rates, such a process is quite different from the
neo-classical notion of steady state growth. The accumulation models. but the recent age is there are shortening
technology cycles, changes in financial markets enabling easier financing of innovative activities (venture capital),
the increasing role of networks and alliances in technology development, and the closer link to science.

world economy as a constant process of transformation

2.3.1.3 Convergence defined types. Rephrase into two or three

liner
- Absolute Convergence: Lower initial GDP will lead to a higher average growth rate. The implication
of this is that poverty will ultimately disappear 'by itself'. It does not explain why some nations have
had zero growth for many decades (e.g. in Sub-Saharan Africa)
- Conditional Convergence: A country's income per worker converges to a country-specific long-run
level as determined by the structural characteristics of that country. The implication is that structural
characteristics, and not initial national income, determine the long-run level of GDP per worker.
Thus, foreign aid should focus on structure (infrastructure, education, financial system etc.) and
there is no need for an income transfer from richer to poorer nations.
- Club Convergence: It is possible to observe different "clubs" or groups of countries with similar
growth trajectories. Most importantly, several countries with low national income also have low
growth rates (the thresholds). Thus, this adds to the theory of conditional convergence that foreign
aid should also include income transfers and that initial income does in fact matter for economic
growth.

2.3.1.4 The past, present, and future of economic growth D

Rodrik - Challenge, 2014 - Taylor & Francis
(Rodrik, 2014)
Economic growth is a precondition for the improvement of living standards and lifetime
possibilities for the “average” citizen of the developing world. Can this recent performance be
sustained into the future, decisively reversing the “great divergence” that has split the world into
rich and poor countries since the nineteenth century?
what drives growth
Two key dynamics are behind growth. First, there is the development of fundamental capabilities
in the form of human capital and institutions. Long-term growth ultimately depends on the
accumulation of these capabilities—everything from education and health to improved
regulatory frameworks and better governance (Acemoglu and Robinson 2012; Allen et al. 2013;
Behrman and Kohler 2013).
Accumulation model supports thresholds
Growth based on the accumulation of fundamental capabilities is a long-drawn-out affair.
The absence of “unconditional” convergence
Contrary to theoretical expectations, there is no tendency for poor economies to grow more
rapidly than richer economies.
Over any sufficiently long time horizon, the growth rate of economies is basically uncorrelated
with their initial level of productivity or distance to the technological frontier. This means that a
middle-income or rich economy is as likely to experience rapid growth as a poor economy.
“conditional” convergence, which is a well-established regularity in cross-country data. That is,
when growth rates are conditioned on a small set of variables such as human capital, investment,
institutional quality, exposure to trade, and macroeconomic stability, the growth residuals are
systematically and negatively correlated with initial levels of gross domestic product per capita.
Put differently, there is economic convergence, but only among the subset of countries that
attain these conditioning variables. (Rodrik, 2014)
Unfortunately, the conditioning variables that are typically included in growth regressions are
usually endogenous variables them-selves, and they tell us little about what specific policies to
pursue.
These came in two clusters. The first were a set of countries like Greece, Italy, Portugal, and
Spain that were on the periphery of Western Europe and benefited first from European
reconstruction in the immediate aftermath of World War II and subsequently from the European
integration process. For the most part, these growth episodes ran their course by the late 1970s.
The second cluster comprises the well-known East and Southeast Asian tigers, countries such as
Japan, South Korea, Taiwan, Singapore, Hong Kong, Malaysia, and China. Unlike the first
cluster, these did not share (at least initially) a geographic advantage.
an important demonstration effect in the region. South Korea’s strategy was directly influenced
by those of Japan and China (by the precedents of Hong Kong and Taiwan). Southeast Asian
countries such as Malaysia and Indonesia explicitly targeted industrialization after observing the
successes of the so-called gang of four (South Korea, Taiwan, Hong Kong, and Singapore).
Almost all of these economies built highly competitive manufacturing industries and experienced
very rapid penetration of export markets in manufactures.
When one looks at formal manufacturing industries, one uncovers a surprisingly strong
convergence relationship (Rodrik 2013).
countries with better trade links and at higher levels of financial development likely provide a
better context for manufacturing convergence. at least some of the cause relates to the tradable
nature of manufacturing industries and the relative ease of technology transfer across borders.
So even though manufacturing productivity tends to converge almost everywhere, what
distinguishes successful countries from others is their ability to expand manufacturing
employment and output rapidly.
Asian ones are also characterized by significantly greater degrees of government intervention
for virtually the entire universe of countries that lie in between central planning and laissez-faire,
less intervention is not necessarily good for performance.
Demonstration effects in turn refer to unremunerated learning spillovers.
The challenge is to design an architecture that respects the domestic priorities of individual
nations, while ensuring that major cross-border spillovers and global public goods are addressed.
Can go to policy recommendations..such as improvement in education and other capabilities are
a must for industrial growth, and that globalization and modern capitalism doesn’t promise
convergence.
The two sector model corresponds with the innovation capability and absorption capacity models
 2.3.1.5 Demographic Factors
Phases of global demographic transition correlate with phases of the Great Divergence and Great
Convergence (Korotayev et al., 2015)
The Great Divergence and, to a lesser extent, the Great Convergence phenomena have attracted
considerable scholarly attention. However, the existing attempts at explaining these phenomena
and their background share two significant drawbacks: first, no model (to the best of our
knowledge) has managed to account for both the Great Divergence and the Great Convergence
so as to explain the timing of the trend change (around 1970s). Second, most existing models
concentrate heavily on the economic forces, frequently neglecting the demographic factor. We
offer an approach to overcome these drawbacks, revealing a close coupling between phases of
global demographic transition and phases of the Great Divergence and Great Convergence. As
we account for the crucial role of the demographic component in these processes, we show that
the timing of the trend change was not coincidental. Our findings suggest that the dynamics of
global population growth and the Great Divergence and Great Convergence therefore may be
considered so closely coupled as to be two sides of the same coin. On the other hand, they also
suggest that the Great Divergence and Great Convergence should be treated as a single process,
as two phases of the global modernization.
(Korotayev et al., 2015)
2.3.1.6 Urbanization
This paper examines the economic development prospects for urban areas arising from localized
clusters of high technology activity. Economic development opportunities are expected to be
expressed in the development of local linkage patterns: employment linkages, production and
service linkages and linkages to local universities..(Shachar & Felsenstein, 1992)
2.3.1.7 History/Culture
This article addresses the often overlooked S&T policy makers in the Central and Eastern
European (CEE) economies and the challenges they face in transition. While still coming to grips
with patterns and processes innovation under market conditions, policy makers are under
pressure to resolve financial and organizational crises and to secure budgetary support. In this
paper, we demonstrate how the socialist model of innovation is still shaping innovation policies
in the CEE in general and with examples from individual countries. We outline three reasons for
the persistence of the model: (1) that the model is embedded in these societies; (2) that the policy
tools and targets associated with model remain unchallenged; and (3) that vested interests
amongst policy makers and researchers encourage a continuation in policy focus. Finally, we
consider how the persistence of the model may harm the long-term economic performance of the
CEE and what can be done to change the mental models that underlie innovation policy making.
(Acha & Balazs, 1999)
2.3.1.8 Geography
In this paper, we investigate the relationship between location patterns, innovation processes and
industrial clusters. In order to do this we extend a transactions costs-based classification into a
knowledge-based taxonomy of clusters, along the lines suggested by a critical revision of the
main assumptions underlying most of the existing literature on spatial clusters. Our arguments
show that the transactions costs approach and the innovation and technological regimes
framework are broadly consistent, and that real insights into the micro foundations, nature, and
evolution of clusters can be provided by these classification systems (Iammarino & McCann,
2006)
2.3.1.9 Diaspora
The international migration of highly skilled labor was formerly a threat to the underdeveloped
world with re -gard to indigenous innovation capacity. However, certain countries have
successfully turned “brain drain” into “brain gain” by effective engagement with a skilled
diaspora who have returned to set up business ventures in the homeland. This article advocates
an entrepreneurial approach to the development of national innova -tion capacity through
contemporary diasporic entrepreneurship (CDE). Drawing evidence mostly from China, the
article argues that (1) CDE offers an alternative to conventional indigenously and internationally
oriented approaches toward innovation capacity development; (2) compared to other ways of
diaspora homeland engagement, CDE is most beneficial to capacity development; and (3)
besides participating in philanthropic and scientific projects, a skilled diaspora returning as
private business owners represents an often more productive way of contributing to national
capacity development. (Lin, 2010)
2.3.1.10 Institutions. Patent and IP
This paper examines how the role of patents and utility models in innovation and economic
growth varies by level of economic development. Using a panel dataset of over 70 countries, we
find that patent protection is an important determinant of innovation and that patentable
innovations contribute to economic growth in developed countries, but not in developing.
Instead, in developing economies, a minor form of intellectual property rights (IPRs) - namely
utility models - is conducive to innovation and growth, controlling for other factors. Using
Korean firm level data as a case study, we find that utility model innovations contribute to firm
performance when firms are technologically lagging and that those minor innovations can be a
learning device and thus a stepping stone for developing more patentable inventions later on.
Upon reaching higher levels of technological capabilities, firms become more reliant upon
patents and less on utility models. Thus the lesson here is that patent protection enhances
innovation and economic growth in countries where the capacity to conduct innovative research
exists (threshold). Where this capacity is weaker, a system that provides incentives to conduct
minor, incremental inventions is more conducive to growth. The significance of this paper is to
emphasize the importance not just of the strength of IPRs but of the appropriate type of IPRs for
economic development. (Y. K. Kim, Lee, Park, & Choo, 2012)
2.3.1.11 Maddison, 2005 Experience of Growth, Divergence, and
Convergence since 1950 A.
Experience of Growth, Divergence, and Convergence since 1950. (Angus Maddison, 2005)
In the past half-century, there have been major changes in the pace and pattern of growth in
different parts of the world. The years 1950 to 1973 were a golden age of unparalleled
prosperity. World per capita GDP rose at an annual rate near 3 percent; world GDP, nearly 5
percent (see table 3); and exports almost 8 percent. Performance was better in all regions than in
any earlier phase. There was a significant degree of convergence in per capita income and
productivity, with most regions growing faster than the United States (the lead economy, with
the highest productivity level).
After 1973, there was a marked slowdown in world growth. There was substantial divergence
between different regions, and performance in many of them was below potential. In the
advanced capitalist countries, per capita GDP growth slowed substantially after 1973. To a
significant degree, this was due to a deceleration of technical progress in the United States, the
country operating closest to the frontier of technology. There was less scope for rapid catch-up in
productivity in Western Europe and Japan, as these “follower” countries (i.e., those lagging
behind the United States) had eroded the once-and-for-all opportunities they exploited in the
golden age. Some slowdown in these economies was warranted, but policy failings made it
bigger than it need have been (see Maddison 2001, 131–41 for a detailed analysis). By far the
best performance in 1973–2001 came from fifteen economies of East Asia, which produce a
quarter of world GDP and have half the world’s population. The success of resurgent Asia has
been extraordinary. Per capita growth was faster after 1973 than in the golden age and more than
ten times as fast as in the old liberal order (1870–1913). There has been significant catch-up on
the advanced capitalist group and a replication (in various degrees of intensity) of the big leap
forward achieved by Japan in the golden age. If the world consisted only of the advanced
capitalist countries and resurgent Asia, the pattern of development since 1973 could be
interpreted as a clear demonstration of the possibilities for conditional convergence suggested by
neoclassic growth theory. This supposes that countries with low incomes have “opportunities of
backwardness” and should be able to attain faster growth than more prosperous economies
operating nearer the technological frontier. This potential can be realized only if such countries
are successful in mobilizing and allocating resources efficiently, improving their human and
physical capital to assimilate and adapt appropriate technologies. The resurgent Asian countries
were successful in seizing these opportunities.
All other regions of the world did very badly in 1973–2001. The loss of momentum was very
sharp in Africa, Latin America, and the Middle East. These economies suffered major shocks as
the result of the slowdown in the advanced capitalist countries. The shocks crippled their growth
momentum and left their economic policy in disarray. Their economic performance in the golden
age had not been due to any great virtues of domestic policy but was dependent on the diffusion
effects of high growth momentum in the advanced countries. The sharp slowdown in the
capitalist core sparked off debt crises, inflation, and fiscal and monetary problems in Latin
America and Africa. In the Middle East, fluctuating oil prices and wars affecting Iran, Iraq, and
Lebanon were major disturbing forces. The biggest of these system shocks was the political and
economic collapse that accompanied the disintegration of the USSR into fifteen independent
states. This shock also led to political change in East European countries and the collapse of their
command economies. These successor states of the USSR had major problems in adjusting their
policies and institutions in order to function successfully as new members of a capitalist world
economy, which offered new opportunities for trade and access to foreign capital but also
involved new dangers of instability and new rules of behavior.
 2.3.1.12 “The Great Divergence.” (Jones, 2016)

2.3.1.13 Das, 2016 handbook on indicators of convergence,

The handbook of research on global indicators of economic and political convergence, ;low citations
don’t cite
(Das, 2016)

Such convergence in the growth process is supposed to be made possible through the use of
better technology by the LDDCs and a shift of resources from the slow-growth sector to the
high-growth sector in an economy. It is also assumed that the marginal productivity of capital in
LDDCs would be much higher than that in developed countries because the usage of capital in
the production process remains at a low level in LDDCs.(Debashis Mazumdar, 2016)
Defining beta and sigma convergence, and sub-group sub-period vocabulary.
B-Convergence is defined by a negative correlation between the growth rate of PCI and the
initial income level. This convergence is usually conditional because countries have different
structural characteristics (propensity to save, population growth rate, technological progress,
etc.). On the other hand, when the dispersion of real per capita income across a group of
economies fell over time, there is (sigma) convergence.
Both country specific and economy-group specific analysis have been done to identify the B-
convergence. The average annual growth rates of PCI for the nine sub-groups of economies have
been calculated by dividing the total time span (1960-2013) into the five sub-periods, and then
deviations from of these growth rates for each sub-group (excpect HIC) from that of HIC have
been measured for each sub-period. A negative difference in these growth rates, i.e. when the
PCI growth for any group surpasses that of the HIC, would indicate-convergence.

2.3.1.14 DAS 2016 Handbook of research on Global Indicators of

economic and political convergence
Whether the developing countries levels of households consumption expenditure are converging
to the ones in developed countries during 1980-2013 in the sample of 40 countries. The study
reveals that there is no significant Beta or Sigma Convergence among either in the cross section
or in pooling of the data during the given period. But population growth factor is making the
countries converge significantly in conditional sense. By separating the entire data, we observed
that for the entire period, the developed countries are significantly converging in absolute sense
while the developing countries are not, although there are mixed results in sigma convergence
(Das, 2016)
Recent studies on income convergence
There are many traditions of convergence analysis, economic indicators like households’
consumption expenditure, capital accumulation, productivity, infrastructure, and variables
associated to political social and environmental aspects.
r tries to analyze whether the developing countries’ levels of households’ consumption
expenditure are converging to the ones in the developed countries during 1980-2013 in the
sample of 40 countries. The study reveals that there is no significant absolute β and σ
convergence among either in the crosssection or in pooling of the data during the given period.
But population growth factor is making the countries converge significantly in conditional sense
The persistently large income gap between the Developed Countries (DCs) of the North and
relatively Less Developed and Developing Countries (LDDCs) of the South is one of the most
notable features of the international community over the last few decades
Different research works in this field have indicated that the average annual growth rate of per
capita income in LDDCs has been faster compared to that in DCs particularly since early 1990s
indicating a sign of convergence in the growth process. However, the absolute gap between the
DCs and LDDCs in terms of per capita GNP has widened over years.
As time goes on, there has been a lot of studies on the convergence or divergence of certain
variables which are proxy to the income variable. The present chapter attempts to examine
whether there is convergence or divergence in per capita gross capital formation across 37
countries for the period 1980-2013. The study observes that there is significant absolute β and σ
convergence for the cross section of all the economies for the entire period
The world economy after the Second World War was clearly divided between the developed
countries of the west and backward countries of the east. As time went on the criteria of some of
the eastern countries tended to convert into less developed, developing and presently emerging in
nature. China, India like heavy weights and Singapore, Thailand, Indonesia, Malaysia, Taiwan
like dynamic economies from Asia, Brazil, Argentina from Latin America and South Africa,
Ghana and Nigeria from the African Zone have been proving their existence in the world
economic and political fields over time. In the past the so called developed economies were
used to export basic production inputs to the backward economies and were enjoying positive
balance of payments situations
In addition to that almost all countries of the world have entered into the phase of globalization
by means of liberalizing their economies into world trading activities that made them beneficial
in terms of growth rates of GDP (either by proper allocation of resources, rising factor
productivity, greater financial and real sectors linkages, etc.) in one side vulnerable in terms of
weak resistance power to any shock in the external fronts and rising inequalities and joblessness
in the domestic economies. When all the developing and backward countries will catch up with
the developed ones then only the real meaning and significance of globalization of world
economy will make sense.
d studies in the book presents mixed results of convergence and divergence in respect of all
economic, political, environmental and social indicators considered for its development. While
there is no convergence among the selected countries in households’ consumption expenditure,
there is convergence in capital formation. The developed countries only have shown the sign of
convergence among themselves in respect of households’ consumption expenditure but clubbing
with the developing countries, the entire sample fails to show any sign of convergence. The
countries from all status of developments have shown a sign of convergence and falling
inequality with respect to roads as infrastructure and health care status.

2.4 Objectives and hypothesis,

compatibility of cross-country growth patterns with multiple steady state models. Dharluf and
jhonson
the existence, characteristics and dynamics of different technology clubs casta;lascci
information objective and the empirical test objective or hypothesis,
update the measure of technological capabilities, in a panel data set for a 20 year period for the
maximum possible number of nations
The purpose of the paper is to provide an encyclopedia of the fundamental facts of economic growth upon which our
theories are built, gathering them together in one place and updating them with the latest available data. (similar to
our objectives) in the same vein, we look for technological levels rather than income levels. (Jones, 2016)

“Understand the distribution patterns of technological capabilities among nations and changes in
them over the past twenty years.…”
2.5 Problem significance
So we have quite a few useful models and data and some unexplored venues, this is too good and
opportunity to forgo,
Significance in measurement and in dynamics, from typical and entirely new revolutions
perspective
2.5.1.1 Park, Choi, & Hong, 2015, a very similar paper objective,
recommended methods
(Park et al., 2015) s and methods, principle component, Log R, ICT diffusion index, clusters but also different in
many ways.. digital divide, convergence, groups of convergence, difference between the terminologies..
convergence level and speed of convergence. factors found are flimsy. Regression based clustering

The process of testing the subgroup convergence starts by ordering the members by the last observation and finds
the core group of which members maximize the t statistic of log t regression. After the core group is detected, add
non-core members one by one at a time to the core group until the t statistic does not reject the null of convergence.
If adding further non-core members to the core group makes the t statistic to reject the null of convergence, then stop
adding non-core members and classify till then identified members as the subgroup members. After detecting the
first subgroup members in this way,we can repeat this procedure for another subgroup. The details of the procedure
are described in PS.

And adds to cluster analysis, regression tree (CART) analysis, these can be done with my work. Is between 1990
and 2000.. mine adds to it. (Castellacci, 2008a)
the cross-country distributions of technological infrastructures and human capital have experienced a process of
convergence, whereas the innovative intensity is characterized by increasing polarization between rich and poor
economies. Thus, while the conditions for catching up have generally improved, the increasing innovation gap
represents a major factor behind the observed differences in income per capita(Castellacci, 2011).. there are some
changes in innovation gap and absorption gap,

techno-economic and socio-institutional in innovation systems (and in mainstream) over laps with innovation
capability and absorptive capacity in technology gap tradition.

The huge economics literature flourished in the last couple of decades on the subject broadly falls into two distinct
research traditions, namely the mainstream R&D spillovers approach and the evolutionary economics view.
traditional view of economic policy based on a market-oriented approach, the evolutionary view is on the contrary
consistent with the idea that institutional arrangements and policy interventions do indeed play a fundamental role
for shaping innovation patterns and their impacts on the competitiveness of industries

we could check the economic policies of nations (reviewing academic and govt policy documents) and see which
tradition has more influence and whether it has something to do with successful catching up.

2.5.2 Methods (5 pages)

So, many indexes proposed, many utilities and short comings, theory behind the measurement,
indicators used, pillars, weights, clusters, convergence and relationship between ac/ic and tci and
gdp.
Factors, clusters, Mnl, convergence regression, and liner regression for gdp and other tests.
To prove what? Depends on objectives,
2.5.2.1 Measuring technology through index\

Technological progress has been the most fundamental element of change. It is also the most
difficult to measure in a summarising statistic, though it is easy to illustrate its long-term impact.
(Angus. Maddison, 1995)
The innovation scientists on the contrary preferred to measure technological capabilities more directly, with use of a
set of indicators that measure relevant to technological capabilities of nations.

2.5.2.2 About indexes and indicators

2.5.2.3 Freeman 2007, 20 years of indicators

The science-technology-innovation system is one that is continuously and rapidly evolving. The
dramatic growth over the last twenty years in the use of science, technology and innovation (STI)
indicators appears first and foremost the result of a combination between on the one hand the
easiness of computerized access to an increasing number of measures of STI and on the other
hand the interest in a growing number of public policy and private business circles in such
indicators as might be expected in societies which increasingly use organised science and
technology to achieve a wide variety of social and economic objectives and in which business
competition is increasingly based on innovation. As highlighted on the basis of 40 years of
indicators work, frontiers and characteristics that were important last century may well no longer
be so relevant today and indeed may even be positively misleading.(Christopher & Luc, 2007)
(Christopher & Luc, 2007)
trying to put numbers on this may be a challenge, as Archibugi and Coco (2005) point out. Still
there have been some attempts in that direction, see, for example, Furman et al. (2002) and
Furman and Hayes (2004),

2.5.2.4 Desai 2000

(Desai et al., 2002)
Lall 2001 Industrial Development Scoreboard
2.5.2.5 Competitiveness indices and developing countries: An
economic evaluation of the global competitiveness report
Finds deficiencies at several levels. Its definitions are too broad, the approach biased and the
methodology flawed. Many qualitative measures are vague, redundant or wrong. These weak
theoretical and empirical foundations reduce the value of the indices for analytical or policy
purposes (Lall, 2001),
2.5.2.6 Institutional critique on tai (James 2006)
The final problem, to which I have alluded above, is that the developed country bias of the TAI translates, within
given countries, into an urban bias, since it is generally the urban sector that most closely reflects the conditions
prevailing in the rich countries. And this latter bias, in turn, implies that technological capabilities in areas of the
economy less reflective of conditions in developed countries are ignored. Yet, as also noted above, it is precisely
those other (predominantly rural) areas of the economy that bear most heavily on the likelihood of meeting the
MDGs. (James, 2006) but recent increase in patenting and articles from developing nations has rendered the index
more relevant,

2.5.2.7 Other methods of indexes, moon n lee. Zhou, cherchye

Can be rephrased to refer to weaknesses..rather than the solutions they propose..

(Chung & Lee, 2015) Moon and Lee used experts opinions on the relative importance of each indicator of TAI-01.
(Zhou, Ang, Poh, & Fan, 2007)proposed a multiplicative optimization model for constructing composite indicators.
Similarly, “benefit-of-the doubt” weights were introduced by (Cherchye, Moesen, Rogge, & Puyenbroeck, 2007), to
foster acceptance of the eventual results by the national stakeholders. Later the same author (Cherchye et al., 2006)
created a new composite indicator using DEA and Robustness analysis keeping TAI-01 as the key example

2.5.2.8 Weakness of indexes, aggregation

Assumption that individual indicators are substitutes, which thus can be aggregated and averaged (Radosevic &
Yoruk, 2015)

used a multiplicative optimization model (Zhou et al., 2007)

DEA is used by (Cherchye et al., 2007) AN INTRODUCTION TO ‘BENEFIT OF THE DOUBT’

 2.5.2.9 nexus between human development and technology
developed country bias
the strong nexus between human development and technology, irrespective of the doubts about TAI. Such nexus is
clearly stated in the rationale given by (Desai et al., 2002)to create the TAI:

all indicators are input related and none measure technology performance.

2.5.2.10 Radosevic measurement without theory

(Radosevic & Yoruk, 2015) “measurement without theory” is probably the biggest weakness inherent to index
calculation.

2.5.2.11 List of Composite indicators

Composite indicators (or indexes) are very common in economic and business statistics (TAI (UNDP), Industrial
Development Scoreboard UNIDO, Science and Technology Capacity Index (STCI), by RAND Corporation, WB
KMI,) WEF Innovation index.

A manual called “Tools for Composite Indicators Building” which comprised a large variety of mathematical or
semi-mathematical tools (Nardo et al., 2005b).

for benchmarking the mutual and relative progress of countries in a variety of policy domains such as industrial
competitiveness, sustainable development, globalization and innovation.(Munda & Nardo, 2009)

2.5.2.12 Cherchye 2004, index flaws

The general pros and cons for synthetic indicators are also discussed in Cherchye et al. (2004b). With a focus on
social indicators, these authors express concern by decision-makers and experts about the emergence of league
tables and the “naming and shaming” which these could entail (Cherchye & Kuosmanen, 2004), p. 923).

One number is considered far too shallow a basis for learning about the multiple factors behind the questions
investigated. On the other hand, the “eye-catching property” of simple index numbers may force public awareness
by providing such a big picture, which may not be mastered by a large number of single indicators, difficult to
understand for a layman.

2.5.2.13 Measurement without theory Koopmans, 1947

Scholars perusing assessment of different aspects of technology are reminded of the danger of “measurement
without a theory” (Tjalling C. Koopmans, 1947)

To formulate explicit assumptions, however general, concerning the probability distribution of the variables, i.e.,
assumptions expressing and specifying how random disturbances operate on the economy through the economic
relationships between the variables.

2.5.2.14 Archibugi & Coco, 2005,9, why measure, assumptions

Why measure

- intro stuff..debate on technology and the wealth of nations were to be increasingly accompanied by empirical
observations and not just by theoretical assumptions

- aggregate various components into a single measure relies upon theoretical hypotheses.

- A satisfactory quantification of current levels of technological capacity is required in order to understand why
some countries innovate and have a more satisfactory performance than others(Archibugi & Coco, 2005)

uses and abuses of macro-indicators of technological capabilities(Archibugi et al., 2009a)Technological capabilities

are a stock and not a flow, and they are less suitable to be described by aggregate values (therefore the index values
and ranks are to be used but not to be abused) as it is done with other macroeconomic variables such as GDP,
unemployment, investments and consumption. This paper measures the stocks of knowledge as an understanding of
the size and behavior of different components of the global system of technology generation and imitation. The
flows include the internet, the global trade and manufacturing system, value chains and the multinational enterprises
(through FDI). That is for a later work..

Annual variations are much less significant since technological capabilities are generated (and destroyed) slowly
over time, even during periods of rapid expansion or social upheavals.

attempt to explain and interpret the process of economic development, scholars must be able to measure the
differences in technological capabilities across countries.

Earlier in introduction, technology and development. also before the objective, highlighting significance,

The (basic)assumption, often implicit but nevertheless largely shared, is that current technology lays the
foundations for tomorrow prosperity(therefore the old innovation). Innovation and technological capabilities are
considered the engine of productivity, international competitiveness, growth, employment, human capital and well-
being(Archibugi et al., 2009b)It is then useful to have first a good picture of which aspects of the technological
change we want to deal with, and then start to develop and manipulate the increasingly sophisticated measurement
tools.

Can go to measurement – direct vs indirect, economic vs innovation debate- using indexes, benefits and harms of-
Calculating an index entails an essential communication function as a Source of information for public policiesand
as Input for firms’ strategies. Policy makers need to locate their country position in the global landscape to identify
national strengths and weaknesses, to secure technological opportunities, (Archibugi et al., 2009b)

Composite Indicators can have a communication function; they draw attention to important topics in the policy
arena. They also induce a kind of quasi-competition for best practices and they reward those who manage to perform
well(Grupp & Schubert, 2010). (Archibugi et al., 2009b)

On synthetic indicators, as freeman, lall, archibugi,

The various sources of technological capability are more likely to be complementary rather than
interchangeable. First rate infrastructures devoid of a sufficiently qualified labor force will be
useless and vice versa (Abramovitz, 1989, Maddison, 1991). Moreover, successful integration
among the various waves of innovations has the effect of multi- plying its economic and social
impact (Antonelli, 1999; (Amable & Petit, 2001), perez). Path dependence..(much of it examines
"snapshots" of various innovation systems at a specific point in time and lacks historical
depth(Fagerberg, Mowery, & Verspagen, 2008). We on the contrary look at the evolution of the
system by taking five observations. Old innovations or path dependence..
––The creation and improvement of techno- logical capabilities involve a crucial element of
technological ‘‘effort.’
–– A measure to account for them meaningfully should consider the components that are specific
to both developed and developing countries (Lall, 2001)
It is hardly surprising that data for the selected number of countries that concentrate the bulk of
inventive and innovative activities are much richer. The attempt here is to provide measures for a
much larger group of countries which, as a whole, have a much more limited level of
technological capabilities.
This analysis is based upon a number of assumptions. Can be summarized into a line or two and
placed into index building part.
First, we assume that a comparative analysis across countries is meaningful (Sirilli, 1997). In
spite of the enormous differ- ence across countries (how can one describe in a single number the
technology gap between Switzerland and Somalia?), countries can be compared. But we also
assume that a battery of indicators could provide a more comprehensive picture of the
differences than a single indicator would. The statistics produced achieve greater significance
when considering homogeneous groups of countries and allow comparisons between countries
geographically, culturally and economically close to each other, (such as, for example,
Switzerland and Germany, Somalia and Ethiopia. For a discussion, see Pietrobelli, 1994).
Second, we assume that a country-level analysis still proves useful despite the enormous
differences found within countries. Synthetic indicators for countries as large as China or India
inevitably overestimate the technological capabilities of certain areas and underestimate the
capabilities of others. This also applies to countries with much higher technological capabilities
such as, for example, the United States and Japan. Moreover, recent research on technological
agglomerations (Cantwell & Iammarino, 2003) showed that technological activities tend to
cluster in a few hubs even in the most technologically advanced countries. Still, the notion of
national systems of innovation (see Andersen, Lundvall, & Sorrn- Friese, 2002; Edquist, 1997;
Freeman, 1997; Lundvall, 1992; Nelson, 1993) indicates that it makes sense to analyze the
technological capabilities of territorial states, since these provide one of the main
institutional settings for know-how generation and diffusion The same analysis has already
been successfully applied to developing countries (see Cassiolato & Lastres, 1999, and Sutz,
1997, for Latin America; Hobday, 1995, for Asia; Lall & Pietrobelli, 2002 for Africa).
Third, although we measured technological capabilities with a variety of indicators, we made an
attempt to provide a synthetic indicator. Other exercises made an effort to estimate countries’
technological capabilities by aggregating data at the firm level. Unfortunately, this approach has
not yet been able to generate data for larger groups of countries. Our measure is typically a
macro-economic one and, at the country level, it is composed of a selected number of indicators.
In spite of the limitations of a synthetic indicator, we share with the UNDP, UNIDO and WEF
the belief that the various components singled out could be added up in order to provide a
more comprehensive measure of technological activities.
From a cognitive perspective, knowledge is composed of codified elements (like those available in scientific and
technical literature, in patents, manuals, or blueprints), and tacit elements embodied in an expert and qualified labour
force. patents and articles vs education indicators. (Archibugi et al., 2009b)a)

Theory behind measurement, we desire indicators that will be able to capture at least:

▪ disembodied and embodied knowledge; ▪ codified and tacit knowledge; and ▪ the generation and the imitation of
innovation.

indicators here considered deal with “technological capabilities” more than with “innovative capabilities”. condition
sine qua non to create, absorb and diffuse technological innovations across an economic system. The limit of this
approach is that it may not be able to gauge other forms of innovation such as non-technological innovations,
organizational innovations, marketing innovations and others.
 2.5.2.15 (Archibugi & Coco, 2005) Measuring technological capabilities at
the country level: A survey and a menu for choice. Research Policy
debate on technology and the wealth of nations were to be increasingly accompanied by empirical observations and
not just by theoretical assumptions

aggregate various components into a single measure relies upon theoretical hypotheses.

A satisfactory quantification of current levels of technological capacity is required in order to understand why some
countries innovate and have a more satisfactory performance than others(Archibugi & Coco, 2005)

2.5.2.16 (Archibugi, Denni, & Filippetti, 2009) Technological

capabilities The state of the art of synthetic indicators,
uses and abuses of macro-indicators of technological capabilities(Archibugi et al., 2009b)
Technological capabilities are a stock and not a flow, and they are less suitable to be described by aggregate values
as it is done with other macroeconomic variables such as GDP, unemployment, investments and consumption.17
Annual variations are much less significant since technological capabilities are generated (and destroyed) slowly
over time, even during periods of rapid expansion or social upheavals.

attempt to explain and interpret the process of economic development, scholars must be able to measure the
differences in technological capabilities across countries. The assumption, often implicit but nevertheless largely
shared, is that current technology lays the foundations for tomorrow prosperity. Innovation and technological
capabilities are considered the engine of productivity, international competitiveness, growth, employment, human
capital and well-being(Archibugi et al., 2009) It is then useful to have first a good picture of which aspects of the
technological change we want to deal with, and then start to develop and manipulate the increasingly sophisticated
measurement tools.

repeat

2.5.2.17 About tech and indexes, (Archibugi & Coco, 2005) ARCO
index citing Verspagen
(Archibugi & Coco, 2005) Measuring technological capabilities at the country level: A survey
and a menu for choice
(Barro & Sala-i-martin, 1992) technology spill-overs do not occur automatically. In order to assimilate knowledge
from abroad, a country must be able" to apply this knowledge in its own economic system. 'learning capability'
depends on an 'intrinsic' learning capability (depending on such variables as the education of the labour force and the
quality of the infra-structure), besides a catching up phase, there is a also a 'pre-catching up phase', in which a
country builds up its intrinsic learning capability, and a 'post-catching up phase' in which domestic research
activities begin to assume a greater importance than technology spill-overs. education is indeed an important factor
in the catching up process,

Can relate with Narullah,, the stages assumptions

The interpretation of statistical data, medals table ref,

explanations of differences across countries in growth rates, composition of trade, competitiveness, human
development, and employment. This huge and mounting literature has often assumed that these differences are
dependent on the level of technological expertise, and in turn new efforts have been made towards understanding,
measuring, and explaining the latter. However, to measure technological capabilities is more complicated than to
measure other economic and social indicators. heterogeneous aspects
the key features of technology is precisely its variety; research activities, infrastructures, human skills, the stock of
capital, and many other components constitute the technological capabilities of a country, and it is a hard task to
aggregate them in a logically meaningful way

synthetic indicators can help, highlights some aspects of economic and social life (such as income) and obscures
others (such as well being). Therefore, for other aspects HDI, besies its weaknesses, help to understand the reality
of certain situations, and can assist in devising strategic decisions.

What theory behind the measurement of technological capabilities? Somehow “beauty contests”, but one purpose
of these was an attempt to provide a new instrument that could potentially be used to test any theory. If valuable,
they can be used to test different and even competing

the outcome can be meaningful only when there is an underlying theory that justifies the algorithm.

a certain consensus emerges on the understanding of technological capabilities. 1- they are interconnected to
production capacities (electricity consumption), , the former is a stock of knowledge which should be kept
conceptually separated from the latter (see Bell and Pavitt, 1997, pp. 88–90; Lall, 1990). The

technological capabilities are composed of heterogeneous elements, which can be summarised in the following three
contrasts: (a) Embodied/Disembodied, (b) Codified/Tacit, and (c) Generation/Diffusion.

it is assumed that the various components of technological capabilities are complementary and not substitutes,
aggregation and addition, the scholars take the discretionary decision to attribute a weight, Fourth, these approaches
also share the view that inter-country comparisons are meaningful, in spite of the social, cultural, and regional
variety encountered in each of them.

2.5.2.18 Index details-Country as a unit of analysis

Uncovering the implicit assumptions the use of “countries” as unit of analysis. When technological capabilities are
measured: there are important differences across regions, industries and companies within the same country. The
possibility of inter-country comparisons is based on the implicit assumption that a national system of innovation is
somehow capable to distribute knowledge across the whole country (Archibugi et al., 2009b) same as (Archibugi et
al., 2009b).

2.5.2.19 Index details-Arco 2009 assumptions indexes,

convergence, substitutability, weakness of index
Differences in technological capabilities are very broad [2,11]. Comparisons became more significant if they are
carried out between more similar national systems of innovation. International comparisons also allow us to identify
convergences or divergences across countries. Third implicit assumption, is namely the substitutability among
ingredients. Considering the fundamental differences between the aspects gauged by different indicators, this
assumption is questionable. For instance, tertiary enrolement would be highly correlated with articles and patents.
When we impose ex-ante a weight to each indicator, we provide a subjective value judgment [17]. (Archibugi et
al., 2009b)

One number cannot show the valuable information on why a country is bad in, say, innovation, because they hide
its strengths and weaknesses. The latter can only be assessed in a systemic way. This calls for multidimensional
representations such as spider-charts (Grupp & Schubert, 2010).

(Lall, 2001) criticizes the GCI (Porter), find inconsistencies,

a sort of Olympic medal table of the innovation race (Archibugi et al., 2009a)

(Kovacevic, 2010) critique of hdi by UNDP, summarizes the most common criticisms. Over the last twenty years,
the critiques are mostly related to the choice of indicators, to high correlation of HDI components, functional form
of the HDI including normalization of component indicators, aggregation vs. multiplication, and issues related to
weighting.

Fore runners of arco..TAI in HDR 2001, TAI desai (Desai et al., 2002)

2.5.2.20 Ranking bias, cluster analysis, Archibugi et al., 2009

Comparing nations solely on the basis of their absolute rank or position is prone to the ranking biases. Instead the
cluster analysis technique can provide a more objective classification of nations based on similarities and differences
in each individual indicator. (Archibugi et al., 2009b)

2.5.2.21 (Chen, Derek H. C. & Dahlman, 2005, world bank

knowledge methodology
World bank knowledge economy framework asserts that sustained investments in education,
innovation, information and communication technologies, and a conducive economic and
institutional environment will lead to increases in the use and creation of knowledge in economic
production, and consequently result in sustained economic growth. (Chen, Derek H. C. & Dahlman,
2005)

Projecting the current annual volumes of published patent applications, China will continue to outstrip other regions
to produce over 900,000 invention patent applications in 2018(Thomson Reuters, 2014)

2.5.2.22 Text castallasi, rephrase for my work as well

The analysis makes use of the ArCo database (Archibugi and Coco, 2004a,b) that contains a set
of indicators on various aspects of countries’ technological activities for a large number of
developed and developing economies. The dataset makes it possible to consider various aspects
of countries’ technological capabilities, such as their ability to create and to imitate advanced
knowledge, their technological infrastructures and their education levels.
The empirical work analyses these data by using a threestep methodology. First, the large
number of available indicators is reduced to a smaller number of dimensions by means of a
factor analysis. Secondly, these main dimensions are used to identify different country groups
through clustering techniques. Finally, a multinomial logit test is estimated in order to assess the
statistical precision of the resulting club classification.

The paper is organized as follows. Section 2 presents the data and the indicators used to measure
countries’ knowledge stocks and technological capabilities, and then reports the results of the
factor analysis. Section 3 presents the results of a hierarchical cluster analysis, which explores
the existence of various groups of countries differing in terms of their levels of technological
development. The results of the cluster analysis show the existence of three clubs characterized
by strikingly different levels and diverging dynamics of technological knowledge. Section 4
reports the results of the multinomial logit test of our technology club classification, which
provides basic support for its validity and classificatory power. Section 5 concludes the paper by
discussing the theoretical interpretation of the empirical results and the related policy
implications. We make use of these tests even further,,

2.5.2.23 CHANGES COMPARED TO PREVIOUS ANALYSES

built upon the TAI attempt and the Industrial Development Scoreboard developed by (Lall &
Albaladejo, 2003),(UNIDO, 2002).
We considered this a more effective starting point than the index suggested by the WEF (2002).
(a) Enlarge the number of countries examined without losing data and source coherence,
neglected countries with less than 500,000 inhabitants, except for those countries
(Luxembourg, Malta, Cyprus and Suriname) for which we retained sufficient data. For
those countries for which data proved analytically insufficient (as for most African
countries), missing values were estimated on the basis of national sources, interviews
with country experts, and performance in comparatively similar countries and indicators.
In extreme cases, minimum values were taken for groups of comparable countries (often
equivalent to zero, due to the conditions of extreme poverty of some of the countries
analyzed). Our pool is comprised of 162 countries in total. (amputation(country source,
nearest year, mean of know values, etc), and comparison with arco estimates)
(b) Allowing comparisons over time, cross country and time series.

One line or two, goal posts etc. for details foot note..
In addition to crosscountry comparisons, we attempted time-series comparisons. The pur-
pose of the TAI was not to compare countries at different time points but to perform cross-
country comparisons at particular time points. Standardized indicators from 0 to 1 were built
according to the following formula:
Maximum observed value?Minimum observed value: Observed value?Minimum observed
value
(note: bit incoherent in the start, method must be compared, HDi method, ETC. running values,
estimating time to catch-up) changes in index value indicate convergence, as used in
convergence literature. Casalici, archibuji.. weaknesses.. improvements.. analysis..
Rather than repeating all the technicalities we just refer to arco for details and give correlations.
Fore runners of arco..TAI in HDR 2001, TAI desai (Desai et al., 2002)

2.5.2.24 Ranking bias, cluster analysis, Archibugi et al., 2009

Comparing nations solely on the basis of their absolute rank or position is prone to the ranking biases. Instead the
cluster analysis technique can provide a more objective classification of nations based on similarities and differences
in each individual indicator. (Archibugi et al., 2009b)
2.5.3 Results (16 pages)
of the index, link to index, strengths of the index, its weaknesses, the factor analysis, its finding,
the use of variables in clusters, six clusters, club membership, verification of the clubs MNL,
characteristics, changes, reflections of the past and the geography, thresholds and the gaps,
policy implications, The club convergence,
Empirical tests, the gdp test, the ic ac test mnl, and others. the old and new test, the other tests.
2.5.4 Conclusions, depending on objectives and hypothesis, (1)
new things such as movements of the whole wave and along the whole wave, so wave, capturing
the wave, extension of the wave to global scale, instead of the half hearted previous ones,
diffusion of the wave, the club formation and the accordion like movement of the clubs,

the convenience of ideas, elephant and the blind men, same thing seen from different angles, the
overlapping paradigms,
contributions, the ranks, the club memberships, the number of clubs, the behavior of the clubs,
thresholds, critical mass, the ic ac the old new,
2.5.5 Recommendation (1/2)
2.5.5.1 Kuhlmann 2017 Research Handbook on Innovation
Governance for Emerging Economies, Towards Better Models
(Kuhlmann & Ordóñez-Matamoros, 2017)
From this perspective, countries would progress through small, incremental changes, rather than
through risky and ‘luxurious’ innovation activities. Second, a more ‘progressive view’ is also
found in current political debates, where the only way to get out of the ‘poverty trap’ resulting
from the former view is by investing heavily in R&D and technological innovation, which has to
be done through designing policies targeting the academic and entrepreneurial ‘elite’, as they are
perceived to be the ones able to bring about progress for all; South Korea often serves as an
example (e.g. Lee 2000; Archibugi and Pietrobelli 2003).

2.5.6 Limitations, further improvements(1/2)

new tools and indicators to analyse and capture difficult slippery concepts such as ‘social capital’
and ‘generalized trust’.(recommendations) (Siyanbola, W., Egbetokun, A., Adebowale, B. A., &
Olamade, 2016)
(Kuhlmann & Ordóñez-Matamoros, 2017)
Summerise and evaluates different policies and , identifies numerous academic and policy
perspectives on innovation and development, e.g. the ‘publish or perish’ paradigm (McGrail et
al. 2006), which claims that the main mission of academics is to produce articles in journals with
high impact factors (in Web of Science or in Scopus), tending to undermine the quality of
education and outreach, as well as the relevant contribution of academics to the countries;

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3.1.1 Scraps
3.1.1.1 index clusters D. A. Comin et al., 2012, introduction and
interpretation of Spatial diffusion
(D. A. Comin et al., 2012) We find significant evidence that technology diffuses slower to locations that are farther
away from adoption leaders. This effect is stronger across rich countries and also when measuring distance along the
south-north dimension. A simple theory of human interactions can account for these empirical findings. The theory
suggests that the effect of distance should vanish over time, a hypothesis that we confirm in the data, and that
distinguishes technology from other flows like goods or investments.
at the turn of the century the... developed countries concentrate more than 84% of the world
scientific production, except Asian tigers in 1997-98, but now?
56% of patents granted by the US patent office in 2013 were to foreigners.

The bottom line is that the idea production function remains something of a black box perhaps precisely because we
do not have great measures of ideas or the inputs used to produce them. Examples of progress include (Jaffe &
Caballero, 1992), (Acemoglu & Robinson, 2013), and (Aghion et al., 2014).

declines in misallocation may explain a significant part of US economic growth during the last 50 years

It has long been suggested that knowledge spillovers are quite significant, both within and across countries. To the
extent that these spillovers are increasingly internalized or addressed by policy—or to the extent that the opposite is
true—the changing misallocation of knowledge resources may be impacting economic growth.