If technology has arrived everywhere, why has income diverged?


September 15, 2016


We study the cross-country evolution of technology diffusion over the last two centuries. We document that adoption lags between rich and poor countries have converged while penetration rates, once technologies are adopted, have diverged. The evolution of aggregate productivity implied by these trends in technology diffusion resembles the actual evolution of the world income distribution in the last two centuries. Cross-country differences in adoption lags account for a significant part of the cross-country income divergence in the nineteenth century. The divergence in penetration rates accounts for the divergence during the twentieth century.