narrowly at some sectors in developing countries. There is also some heterogeneity across countries regarding the identified main obstacle. Firms in Senegal cite lack of capabilities, while firms in Vietnam mention lack of demand. Learning about perceived obstacles is important for policy makers. Addressing those issues that entrepreneurs already identify as main obstacles may facilitate political support to implement reforms. Yet, perceived obstacles and drivers do not necessarily imply that these are the most relevant issues faced by the firms. Firms do not know what they do not know. Having more factual evidence, including impact evaluations, about the elements that determine lack of adoption is critical to designing policy well.
Factual Evidence on Drivers of and Obstacles to Technology Adoption This section reviews the factual evidence reported in the FAT survey about key drivers and obstacles for firm technology adoption. Following the framework in figure 6.1, these factors are divided into two groups: those external to the firm and in the enabling environment; and those internal to the firm. External factors that are part of the enabling environment include infrastructure, markets and competition, financial constraints, and access to external knowledge. Internal factors to the firms that affect firms’ capabilities and knowledge include information and behavioral biases, management quality and organization, and know-how and skills.
Factors External to the Firm: An Enabling Environment Infrastructure Infrastructure in general, from electricity to roads and telecommunications, plays an important role as an enabler of technology adoption by firms. Evidence across African countries, for instance, suggests that the spread of fast internet connection has increased firm entry, productivity, and exports in African countries (Hjort and Poulsen 2019). The rapid spread of the internet, as described in chapter 1, and recent increase in the demand for digital technologies due to the COVID-19 pandemic have heightened the role of digital infrastructure. To assess the effect of digital infrastructure on adoption, we use a unique data set for Senegal that allows the impact of geographic proximity to internet infrastructure to be measured.8 In the spirit of Hjort and Poulsen (2019), the analysis, described in Berkes et al. (forthcoming), combines information on the GPS location of the firms that participated in the FAT survey in Senegal with the location of the node of the Senegalese internet backbone. It then explores the contribution of digital infrastructure to the adoption of technologies through the effects of the proximity to the nodes, which translate into having access to better quality internet service, which was improved through the arrival of submarine internet cables in 2011.
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Bridging the Technological Divide
