Knowledge creation, knowledge exploitation and the global economy

- the challenge for developing countries

Jan Fagerberg, Centre for Technology, Innovation and Culture, University of Oslo(based on joint work with Martin Srholec

and Mark Knell)

Potential catch up versus real …

• Technology gaps: potential for growth through catch-up

• Actual growth: Catch-up potential + competitiveness

• Four aspects of competitiveness• Technology competitiveness• Capacity competitiveness• Price competitiveness• Demand competitiveness

100 countries in the 1990s: Data and indicators

• Potential: GDP per capita gap• Technology: R&D, patents, publications and

ICT • Capacity: Education, financial system,

governance, • Price: Growth in unit labour cost• Demand: Growth of world demand (weighted

by export composition)

Convergence or divergence in GDP per capita?

Technology Competitiveness

Capacity Competitiveness

What explains the change in technologyand capacity competitiveness?

Price Competitiveness

Demand Competitiveness

More than one road to success?

• Regression on growth: Potential catch up important but depends on competitiveness

• Technology & demand competitiveness explains success of “Asian tigers” (but what about rest of Asia?)

• Crucial role of ICTs • Capacity competitiveness explains (most of)

the catch up of new EU members• Potential lost: Sub-Saharan Africa?

Why Growth Rates Differ?Actual and estimated differences in growth vis-à-vis

the world average, 1993-2001

Contribution of the explanatory factors

N

Initial GDP

per capita

Actual difference in growth

Estimated difference in growth

Initial GDP

per cap.

Tech- nology

Capacity Price Demand Fixed factors

Developed Countries 24 19,902 0.2 0.0 -1.2 1.1 0.0 0.1 0.3 -0.2

Asian Tigers 4 14,305 2.9 3.1 -0.9 2.3 0.3 0.2 1.0 0.2

New EU Members 10 9,436 -0.7 -0.8 -0.5 -0.1 0.4 -0.2 0.3 -0.8

West Asia 6 6,536 1.6 -0.5 0.1 -0.4 0.1 0.1 0.1 -0.4

Latin America 18 5,625 0.4 0.6 0.2 -0.5 0.1 0.1 -0.3 0.9

East Europe & CIS 12 5,113 -4.6 -2.3 0.3 -0.6 -0.3 -0.4 -0.3 -1.0

North Africa 4 3,771 0.7 0.4 0.5 -0.7 0.1 -0.1 0.3 0.2

East Asia 5 3,466 2.8 1.7 0.7 -0.5 0.0 0.1 0.6 0.8

Sub-Sahara Africa 11 2,235 0.5 0.4 1.6 -0.7 -0.3 -0.1 -0.6 0.5

Central Asia 5 1,606 1.4 0.2 1.4 -0.7 -0.2 0.4 -0.5 -0.2