The World Technology Frontier

Francesco Caselli () and John Coleman ()

No 2584, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We define a country's technology as a triple of efficiencies: one for unskilled labour, one for skilled labour, and one for capital. We find a negative cross-country correlation between the efficiency of unskilled labour and the efficiencies of skilled labour and capital. We interpret this finding as evidence of the existence of a World Technology Frontier. On this frontier, increases in the efficiency of unskilled labour are obtained at the cost of declines in the efficiency of skilled labour and capital. We estimate a model in which firms in each country optimally choose from a menu of technologies, i.e. they choose their technology subject to a Technology Frontier. The optimal choice of technology depends on the country's endowment of skilled and unskilled labour, so that the model is one of appropriate technology. The estimation allows for country-specific technology frontiers, due to barriers to technology adoption. We find that poor countries tend disproportionately to be inside the World Technology Frontier.

Keywords: Appropriate Technology; Cross-Country Income Differences (search for similar items in EconPapers)
JEL-codes: E10 O30 O40 (search for similar items in EconPapers)
Date: Written
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Related works:
Working Paper: The World Technology Frontier (2000)
Journal Article: The World Technology Frontier (2006)
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