Technological Diffusion, Convergence, and Growth

Abstract

We construct a model that combines elements of endogenousgrowth with the convergence implications of the neoclassicalgrowth model. In the long run, the world growth rate is drivenby discoveries in the technologically leading economies. Followersconverge toward the leaders because copying is cheaper than innovationover some range. A tendency for copying costs to increase reducesfollowers‘ growth rates and thereby generates a pattern of conditionalconvergence. We discuss how countries are selected to be technologicalleaders, and we assess welfare implications. Poorly defined intellectualproperty rights imply that leaders have insufficient incentiveto invent and followers have excessive incentive to copy.