Technology Gaps between Industrial and Developing Countries: Are There Dividends for Latecomers?

Do poorer developing countries benefit from relative backwardness? Was their growth in the years 1960–85 greater than would be predicted on the basis of the accumulation of capital and education? The cross-sectional evidence for convergence is not consistent with time-series estimates of rates of growth of total factor productivity. Moreover, some of the existing growth of productivity in developing countries is attributable to the reallocation of labor from agriculture to manufacturing and services, which have higher marginal productivity. Nevertheless, a few economies in Asia have benefited from their ability to shift to higher industrial production functions. Their historical experience, including the interaction between general economic policy and acquisitic technology, sheds light on the lessons for realizing benefits from industrial backwardness.