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.