Since Joseph Schumpeter’s pathbreaking work, know-how has been acknowledged as the middle of financial development and growth. Applied sciences utilized by companies are central to the method of inventive destruction. However regardless of this centrality, there isn’t a complete physique of information throughout international locations and sectors that permits measuring the place the frontier is, how far companies in growing international locations are from it, and what applied sciences companies use of their day-to-day operations.
In “Bridging the Technological Divide,” the seventh quantity of the World Financial institution’s Productiveness Venture, we analyze the primary spherical of the Agency-level Adoption of Expertise (FAT) survey knowledge. This can be a new survey instrument aiming to measure the know-how utilized by companies. The brand new strategies and knowledge collected by means of our survey instrument permit practitioners and policymakers to look contained in the “black field” of know-how adoption by companies and establish key constraints to the digital transformation. Particularly, the guide analyzes knowledge from greater than 13,000 companies in 11 international locations,* throughout a wide range of areas and revenue ranges, and measures greater than 300 applied sciences utilized to basic and sector-specific enterprise capabilities. The FAT knowledge opens new avenues of analysis on know-how, equivalent to the connection between process outsourcing and know-how adoption. This survey empirically validates some already identified details, for instance the constructive relationship between know-how and productiveness on the companies and nation degree. Importantly, our knowledge additionally dispels some myths about know-how adoption and use.
One such delusion is expounded to the upper frequency of leapfrogging in new applied sciences. Nonetheless, in actuality, technological progress is a steady and accumulative course of. It’s a course of that requires companies to progressively purchase the capabilities to undertake extra refined applied sciences.
Higher measures of know-how adoption may help policymakers design more practical insurance policies and dispel myths, such because the frequency of leapfrogging.
The diffusion of cell phones is a distinguished instance ceaselessly cited for instance the method of leapfrogging. The primary cell phone name was made within the early Nineteen Seventies, however it was not till the 2000s that the know-how began to diffuse quickly throughout middle- and lower-middle-income international locations, disrupting the diffusion of fixed-line telephones. Low-income international locations jumped on to the brand new know-how. Utilizing massive companies as a proxy for early adopters of know-how, the evaluation of the FAT knowledge exhibits that the sample noticed in companies’ use of cell versus fixed-line telephones is per leapfrogging (see Determine 1). Small companies (late adopters) are nearly as possible as massive companies (early adopters) to undertake cell phones in enterprise operations.
Determine 1. Proof of leapfrogging is noticed when evaluating the diffusion of fixed-line telephones versus cell phones
Supply: “Bridging the Technological Divide,” 2022.
Nonetheless, this sample doesn’t maintain for different applied sciences. The truth is, leapfrogging just isn’t generally noticed throughout most new applied sciences utilized by companies. For instance, when applied sciences equivalent to: a) design, for sporting attire or b) merchandising, for retail (Determine 2), we discover a totally different sample from above. The determine exhibits that the probability of adopting extra refined applied sciences (the orange, the purple, and the yellow strains, respectively) will increase with agency dimension (the proxy for the time of adoption) and follows the order of sophistication of the applied sciences obtainable—as recognized by sector consultants over the design of the FAT survey ex-ante. Extra refined applied sciences are a lot much less adopted by small companies.
Determine 2. Expertise upgrading is mostly a continuous process
Supply: “Bridging the Technological Divide,” 2022.
General, the outcomes from the FAT survey help the speculation that know-how upgrading is usually a steady course of. This sample is frequent throughout new applied sciences in enterprise capabilities in numerous sectors —agriculture, manufacturing, or providers. The sample additionally holds for applied sciences used in duties which are frequent to all companies, equivalent to enterprise administration, planning, gross sales, and high quality management. An necessary coverage implication is that governments ought to hold prioritizing actions towards constructing capabilities that facilitate technological improve, from the attitude of a steady and gradual course of. Alternatives for leapfrogging could nonetheless exist, however they have a tendency to occur below very particular circumstances and are unlikely to generalize throughout most applied sciences or considerably bridge the technological divide.
*Notice: Bangladesh; Brazil (solely the state of Ceará); Burkina Faso; Ghana; India (solely the states of Tamil Nadu and Uttar Pradesh); Kenya; the Republic of Korea; Malawi; Poland; Senegal; and Vietnam.