The importance of new technologies derives from the fact that they spread across many different users and uses, as well as different geographic regions. The diffusion of technological improvements, across producers within a country and across international borders, is critical for long run growth. This paper looks at some evidence on adoption patterns in the U.S. for specific innovations, reviews some evidence on the diffusion of new technologies across international boundaries, and looks at two theoretical frameworks for studying the two types of evidence. One focuses on the dynamics of adoption costs, the other on input costs.
This paper arose from a plenary lecture delivered at the Society for Economic Dynamics conference at ITAM, Mexico City, in June 28-30, 2018. I thank Robert Lucas and Boyan Jovanovic for helpful discussions and comments, Kai-Wei Hsu for excellent research assistance, and the Federal Reserve Bank of Minneapolis, for hosting several very productive visits. The views expressed herein are those of the author and do not necessarily reflect the views of the National Bureau of Economic Research.