In my Development Economics class we spent extensive amount of time researching and reading about why developing nations are not narrowing the gap (in terms of technology) between themselves and developed nations. It would seem that developed nations are closer to the metaphorical “ceiling.” In contrast, developing nations have much room to grow, thus they should grow faster. This narrowing of the gap is referred to as “convergence.” Knowledge spillover would seem to benefit developing nations, these countries do not have to invest in R&D and should be able to piggyback off the research and breakthroughs of developed nations, without all the headaches.
In practice, studies do not show convergence, studies in fact show divergence. In other words the overall technological gap between developing nations and developed nations is widening. The reasons for this phenomena are numerous and unique to specific nations’ troubles. This article from the Federal Reserve in St. Louis http://research.stlouisfed.org/wp/2012/2012-040.pdf makes the claim that financial institutions (or the lack there of) are the reason for technological sputtering in developing nations. The thinking being, that trustworthy, reliable, existing financial institutions are necessary for technology and investment to take place. This article http://www.brookings.edu/views/papers/rice/poverty_civilwar.pdf from the Brooking Institution and Harvard University draws the correlation between civil war and regression in development. This study specifically looks at Sierra Leone as a case study, their data shows signs of progress in peace time as oppose to in times of civil war, when progress is destroyed. In times of Civil War financial institutions (or the few that there are) become obsolete and criminal activity skyrockets. Criminal activity and therefore the lack of enforceable laws to protect institutions make it impossible for the proper investment that is necessary for technology and development.
Interestingly, there is not universal divergence. Many developing countries are gaining ground and experiencing convergence but many nations are still spinning their wheels. Countries that are gaining ground have avoided the setbacks of civil war and high crime rates, while enforcing financial institutions.
Another reason why many developing nations are not gaining ground is their lack of education towards women. Has Nicholas Kristof discusses in “Half the Sky” lack of education towards young girls is largely responsible for their economic ineptitude, high crime rate, and high birth rate.
On the topic of birth rate, due to population growth a developing nation faces many more obstacles than a young United States when it comes to industrialization and urbanization. Because of carbon dioxide pollution, and certain enviormental standards developing nations nations have more standards and more environmental concerns to consider. This raises the cost and provides another hurdle to jump on the way to technological progress and development.
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I would be interested to see how the developing countries who are catching up compare to those that are not catching up in regards to institutions, education and how much conflict is currently occurring in the country. I feel that the developing countries who are not catching up are doing so in part because of poor institutions and domestic conflict. Also what percentage of these countries have extremely low female enrollment in school?
I would guess that many of the struggling countries show the trend of low female enrollment at all levels of schooling. As Will explained during his presentation at Canton, many of the families in these developing countries have many kids (due to lack of education of birth control, etc) and usually have the option to only invest in the healthiest male of the group in terms of getting an education. The rest, especially the girls, are left to help out with the needs of the house, tend to the fields, or get married.
I feel like the most important factor is stable government and leadership. This can help limit the criminal problems (i.e. corruption, money laundering) and help make investment in the country seem more attractive to other countries. As such, a strong infrastructure is highly important to pull many of these countries out of the holes they find themselves so deeply entrenched in. Many of these countries need help, but before they will receive it they must help themselves. The Sani Abachas of the world cannot be tolerated, and it takes an educated society to understand the wrongs that they are receiving from their “government.”
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