2. Facts about Technology Adoption and Use in Developing Countries
Introduction This chapter presents some stylized facts that have emerged from the Firm-level Adoption of Technology (FAT) survey data in relation to the adoption and use of technology by firms. The data provide granular information for developing and highincome countries to address some previously unexplored questions about the size of the technology gaps between business functions, firms, sectors, regions, and countries.1 To this end, the technology index described in the previous chapter is used to characterize the level of technology sophistication across and within firms. Specifically, this chapter addresses the following questions: ■■
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How far from the technology frontier are the average firms in developing countries? What is the association between the average level of technology sophistication of firms and the productivity of the regions where they are located? How does the technology gap vary across countries, regions, sectors, firms, and business functions? Based on the patterns of adoption by firms, what do the data reveal about technology leapfrogging—jumping stages in the process of technology convergence, such as from manual to advanced digital technologies? Are firms aware about their technology gap?
To address these questions, this chapter presents 10 stylized facts related to comparisons across countries, regions, sectors, firms, and business functions within firms. Among the most novel findings are the large variations in the sophistication of technologies at all levels of aggregation (from countries to sectors to firms); the more micro the unit of analysis—from country to business function within the firm—the larger the variance in sophistication. Moreover, not only is the average technology sophistication positively correlated with productivity, but so is the dispersion of technology sophistication across countries, firms, and business functions within a firm. In line with a rich firm-level literature (see Syverson 2014), the analysis reveals considerable heterogeneity across and within firms regarding the adoption and use of technology. It also demonstrates that this heterogeneity matters for performance. This implies that firms have different incentives to upgrade different technologies. 47
