Working Paper: NBER ID: w16379
Authors: Diego A. Comin; Mart Mestieri
Abstract: We present a tractable model for the analysis of the relationship between economic growth and the intensive and extensive margins of technology adoption. At the aggregate level, our model is isomorphic to a neoclassical growth model. The microeconomic underpinnings of growth come from technology adoption of firms, both at the extensive and the intensive margin. We use a data set of 15 technologies and 166 countries to estimate the intensive and extensive margin of adoption using the structural equations derived from our model. We find that the variability across countries in the intensive margin is higher than in the extensive margin. The cross country variation in intensive margin of adoption accounts for around 40% of the variation in income per capita.
Keywords: Technology Diffusion; Economic Growth; Adoption Margins; Productivity
JEL Codes: E13; O14; O33; O41
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| intensive margin of technology adoption (O33) | income per capita (D31) |
| intensive margin of technology adoption (O33) | productivity (O49) |
| intensive margin of technology adoption (O33) | differences in productivity (O49) |
| intensive margin of technology adoption (O33) | cross-country differences in income per capita (F40) |
| costs faced by producers in adopting new technologies (D24) | intensive margin of technology adoption (O33) |
| overall efficiency of the economy (E23) | intensive margin of technology adoption (O33) |