Technology Diffusion and Postwar Growth
Technology can explain part of the difference [across countries] in economic recovery [after World War II].
Wars are extremely disruptive episodes that lead to major destruction of productive economic resources, yet different countries recover at very different speeds after wars. For example, it took Spain 15 years to reach the pre-Civil War level of per capita GDP, while Italy reached its pre-WWII level of GDP just six years after the end of that war. In Technology Diffusion and Postwar Growth (NBER Working Paper No. 16378), authors Diego Comin and Bart Hobijn find that technology can explain part of the difference in economic recovery.
Comin and Hobijn investigate the remarkable postwar growth experiences of 39 Western European countries and Japan, all of whom had varying degrees of involvement in WWII. They note that, in terms of real GDP per capita, these countries did not simply return to their prewar growth path -- they moved up to a higher growth path than they were on before the war. This prosperity was driven mainly by growth in total factor productivity and was accompanied by commensurate increases in technology usage, the authors find.
The strong postwar growth performance relative to the United States happened in countries that also saw a relatively large pickup in the speed of adoption of technologies that had been invented less than a century before the end of the war, not older technologies. According to the authors, a substantial part of the cross-country variation in these changes in technology adoption lags can be explained by differences in the amount of postwar U.S. economic aid and technical assistance across countries. They interpret this as evidence of technology transfers from the United States to Western Europe and Japan being an important driving force of the impressive postwar growth performance by these recipients.
-- Lester PickerThe Digest is not copyrighted and may be reproduced freely with appropriate attribution of source.