Summing Up

Summing Up

This chapter has presented results from implementing the novel methodology proposed by the FAT survey to measure technology adoption and use at the firm level in 11 countries over 51 regions and all income levels. The chapter provides a snapshot of old and new stylized facts that characterize the process of technology adoption and use in developing countries. The results open the black box of the firm (Demsetz 1997) and describe previously poorly understood elements of diffusion of technology within the firm. While previous work on the diffusion of technology within a firm focused on the increase in the intensity of use of a specific technology (Battisti and Stoneman 2005) or the diffusion across establishments, the data presented here also describe the process of diffusion within the firm across business functions and tasks.

Some of the stylized facts uncovered were already known and complement more macro facts presented in Comin and Hobijn (2004), especially around cross-country differences in technology sophistication. In this volume, however, the findings are presented from the point of view of the firm as the main decision-maker on whether to adopt a technology and for what purpose. Other findings are novel, adding nuance and rigor to the identification of existing technology gaps. Specifically, the chapter shows that:

1. Most firms in developing countries are far from the technology frontier. 2. More productive regions are closer to the technology frontier. 3. Advanced economies have many more sophisticated firms. 4. Technology sophistication varies significantly across business functions, and differences across countries are not maintained at the business function level. 5. Scale and size are important in explaining technology sophistication. Larger firms use more sophisticated technologies, but this scale effect varies across technologies. 6. The largest technology gaps occur within countries, not between countries. 7. More productive regions have more dispersion in regional technology sophistication. 8. There is a large variation in technology sophistication within firms, and it is positively correlated with productivity. 9. Technology upgrading by firms is a continuous process. Leapfrogging technologies is rare. 10.Firms with low levels of technological capabilities are overconfident about their capabilities to adopt and use technology.

The granularity that this methodology provides by focusing on the business function or task opens a promising new research and policy agenda regarding what technologies matter most for performance and whether policies should focus equally on all technologies. The data can also provide important insights about the differences in technology adoption across sectors and their role in structural transformation.