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Table of Contents
Front Cover
Contents
Foreword
Preface
Acknowledgments
About the Authors
Abbreviations
Introduction
The Imperative of Technology in Developing Countries
The Technological Divide
Road Map to the Volume
Contributions to the Literature
Main Messages from the Volume
Notes
References
Part 1 Measuring the Technological Divide
1. A New Approach to Measure Technology Adoption by Firms
Introduction
Measuring Adoption and Use of Technology by Firms
Opening the Black Box: The Firm-level Adoption of Technology (FAT) Survey
The Data Used in This Volume
Using the FAT Data to Understand Some of the Limitations of Standard Measures of Technology
Summing Up
Notes
References
2. Facts about Technology Adoption and Use in Developing Countries
Introduction
Cross-Country Technology Facts
Cross-Firm Technology Facts
Other Technology Facts
Summing Up
Notes
References
3. Adoption of Sector-Specific Technologies
Introduction
Technology Differences across and within Sectors
Technology Upgrading and the Limits to Leapfrogging
Specialization, Technology, and Outsourcing
Summing Up
Notes
References
Part 2 The Implications of the Technological Divide for Long-Term Economic Growth
4. Technology Sophistication, Productivity, and Employment
Introduction
Technology and Firm-Level Productivity
Technology Adoption and Employment
Summing Up
Notes
References
5. Digital Technologies and Resilience to Shocks
Introduction
Digital Technologies
Technology and Resilience
Summing Up
Notes
References
Part 3 What Countries Can Do to Bridge the Technological Divide
6. What Constrains Firms from Adopting Better Technologies?
Introduction
Firm-Level Determinants of Adoption.
Perceived Drivers of and Obstacles to Technology Adoption
Factual Evidence on Drivers of and Obstacles to Technology Adoption
Summing Up
Notes
References
Chapter 7. Policies and Instruments to Accelerate Technology Adoption
Introduction
A Checklist to Design Technology Upgrading Programs
Using the FAT Survey to Inform the Design and Implementation of Policies Supporting Technology Upgrading
Instruments to Support Technology Upgrading at the Firm Level
Summing Up
Notes
References
Appendix A. The Firm-level Adoption of Technology (FAT) Survey, Implementation, and Data Set
Boxes
Box I.1 Defining Technology and Business Functions
Box 1.1 The Technology Index at the Firm Level: An Example from the Food-Processing Sector in Senegal
Box 2.1 The Large Gap in Technology Sophistication between Formal and Informal Firms
Box 3.1 The Strong Sector Composition of the Use of Industry 4.0 Technologies
Box 3.2 The Closeness of Pharmaceutical Firms to the Technology Frontier
Box 6.1 Specific Barriers to the Use of Digital Platforms
Box 7.1 Digital Platforms Are Prone to Market Concentration and Dominance
Box 7.2 The Firm-Level Technology Diagnostic Tool
Box 7.3 Agriculture Extension: The Case of Embrapa
Box 7.4 Credit Guarantees for Technology through the Korea Technology Finance Corporation (KOTEC)
Box 7.5 The Difference between Vouchers and Grants
Box 7.6 Fraunhofer Institutes
Figures
Figure 1.1 While Countries Are Converging in Their Adoption of Technology, They Are Diverging in the Intensity of Use
Figure 1.2 Conceptual Framework for the Firm-level Adoption of Technology (FAT) Survey
Figure 1.3 General Business Functions and Their Associated Technologies
Figure 1.4 Share of Firms Using Technologies Applied to Various General Business Functions, All Countries.
Figure 1.5 Sector-Specific Business Functions and Technologies
Figure 1.6 An Example of the Technology Index
Figure B1.1.1 Comparing Technology Sophistication of a Large and a Small Firm in the Food-Processing Sector
Figure 1.7 Firms Vary Widely in the Status of Their Adoption of General-Purpose Technologies
Figure 1.8 Among Firms with Access to Computers and the Internet, a Large Share Relies Mostly on Less Sophisticated Methods to Conduct Business Functions
Figure 2.1 Estimated Technology Sophistication, by Country: Manufacturing
Figure 2.2 Estimated Technology Sophistication, by Country: Agriculture and Services
Figure 2.3 There Is a Strong Correlation between the Technology Sophistication of a Region and Regional Productivity
Figure 2.4 Cross-Country Differences in Technology Are Also Explained by the Number of Firms Using Sophisticated Technology
Figure B2.1.1 Technology Sophistication Is Significantly Greater among Formal Firms in Senegal
Figure 2.5 The Level of Technology Sophistication for General Business Functions Varies Greatly
Figure 2.6 Technology Sophistication Varies across Firm Size
Figure 2.7 The Likelihood of Adopting Frontier Technologies for General Business Functions Varies across Firm Size
Figure 2.8 The Likelihood of Adopting Frontier Technologies for Sector-Specific Business Functions Varies across Firm Size
Figure 2.9 Rank Orderings of the Distribution of Technology Sophistication Are Consistent across Select Countries
Figure 2.10 Most Productive Countries and Regions Have Firms That Use More Sophisticated Technologies on Average
Figure 2.11 Within-Firm Variance of Technology Sophistication Is Positively Associated with Regional Productivity
Figure 2.12 Technology Disruption in Telecommunications
Figure 2.13 Diffusion Curves, by Firm Size (Early versus Late Adopters).
Figure 2.14 Firms with Lower Levels of Technological Capabilities Tend to Overestimate Their Technological Sophistication
Figure 3.1 Firms in Agriculture Tend to Use More Sophisticated Technologies in Sector-Specific Business Functions
Figure 3.2 The Technology Gaps Are Larger in General Business Functions in Agriculture Compared to Sector-Specific Business Functions
Figure 3.3 Technology Sophistication for Fabrication in Manufacturing Is Low in Developing Countries
Figure B3.1.1 The Likelihood of Adopting Advanced Manufacturing Technologies Varies Widely across Sectors
Figure B3.1.2 More Capital-Intensive Agricultural Firms Are More Likely to Adopt Advanced Technologies
Figure 3.4 Differences in Technology across Countries Roughly Follow Income Differences in the Food-Processing Sector
Figure 3.5 Cross-Country Comparisons in Wearing Apparel Are Not So Large among Exporter Countries
Figure B3.2.1 Pharmaceutical Firms Are Relatively Close to the Technology Frontier, but There Is Significant Room for Improvement in Developing Countries
Figure 3.6 Digitalization of Sector-Specific Business Functions Is at an Early Stage in Retail Services
Figure 3.7 The Diffusion Curves of Newer Sector-Specific Technologies Do Not Suggest Leapfrogging
Figure 3.8 Tractor Ownership, Renting, and Digital Renting Do Not Suggest Leapfrogging through Digital Platforms
Figure 3.9 Across Sectors, There Is Large Heterogeneity in Outsourcing Sector-Specific Business Functions
Figure 3.10 Within Sectors, There Is Heterogeneity in the Degree of Outsourcing within Sector-Specific Business Functions
Figure 3.11 The Significant Correlation between Outsourcing Tasks and Technology Sophistication (All Business Functions) Is Restricted to Some Business Functions.
Figure 3.12 There Are No Significant Differences between Traders and Nontraders in Outsourcing Business Functions
Figure 4.1 Several Drivers Affect the Margins of Productivity Growth
Figure 4.2 Technology Sophistication Is Correlated with Labor Productivity
Figure 4.3 The Level of Technology Sophistication Varies Considerably across Agriculture, Manufacturing, and Services Sectors
Figure 4.4 Differences in Technology Sophistication between the Republic of Korea and Senegal Are Larger in the Agricultural Sector than in Nonagricultural Sectors and Are Driven Mainly by the Low Sophistication of Informal Firms
Figure 4.5 Firms Generally Keep the Same Number of Jobs When They Adopt New Technologies
Figure 4.6 Firms That Have Adopted Better Technology Have Increased Employment
Figure 4.7 More Sophisticated Technologies in Some Business Functions Are More Associated with Employment Growth
Figure 4.8 Firms with a Higher Level of Technology Are Creating More Jobs but Not Changing Their Share of Low-Skilled Workers
Figure 4.9 Firms Using More Sophisticated Technologies Pay Higher Wages
Figure 4.10 Technology Sophistication Contributes to Wage Inequality within Firms
Figure 5.1 Use of Internet and Adoption of Applications of Digital Technologies Vary by Sophistication and Firm Size
Figure 5.2 Digital Technology Intensity Varies across Sectors and Business Functions
Figure 5.3 Some Technologies Diffuse More Rapidly than Others
Figure 5.4 Market Concentration Poses a Challenge for the Supply of Digital Business Solutions
Figure 5.5 The Large Drop in Sales at the Beginning of the COVID-19 Pandemic Persisted for Many Firms, and the Loss Was Greater for Microenterprises and Small Firms
Figure 5.6 Demand for Digital Solutions Increased Greatly in Response to the COVID-19 Pandemic.
Figure 5.7 A Large Share of Businesses Digitalized during the COVID-19 Pandemic.
Contents
Foreword
Preface
Acknowledgments
About the Authors
Abbreviations
Introduction
The Imperative of Technology in Developing Countries
The Technological Divide
Road Map to the Volume
Contributions to the Literature
Main Messages from the Volume
Notes
References
Part 1 Measuring the Technological Divide
1. A New Approach to Measure Technology Adoption by Firms
Introduction
Measuring Adoption and Use of Technology by Firms
Opening the Black Box: The Firm-level Adoption of Technology (FAT) Survey
The Data Used in This Volume
Using the FAT Data to Understand Some of the Limitations of Standard Measures of Technology
Summing Up
Notes
References
2. Facts about Technology Adoption and Use in Developing Countries
Introduction
Cross-Country Technology Facts
Cross-Firm Technology Facts
Other Technology Facts
Summing Up
Notes
References
3. Adoption of Sector-Specific Technologies
Introduction
Technology Differences across and within Sectors
Technology Upgrading and the Limits to Leapfrogging
Specialization, Technology, and Outsourcing
Summing Up
Notes
References
Part 2 The Implications of the Technological Divide for Long-Term Economic Growth
4. Technology Sophistication, Productivity, and Employment
Introduction
Technology and Firm-Level Productivity
Technology Adoption and Employment
Summing Up
Notes
References
5. Digital Technologies and Resilience to Shocks
Introduction
Digital Technologies
Technology and Resilience
Summing Up
Notes
References
Part 3 What Countries Can Do to Bridge the Technological Divide
6. What Constrains Firms from Adopting Better Technologies?
Introduction
Firm-Level Determinants of Adoption.
Perceived Drivers of and Obstacles to Technology Adoption
Factual Evidence on Drivers of and Obstacles to Technology Adoption
Summing Up
Notes
References
Chapter 7. Policies and Instruments to Accelerate Technology Adoption
Introduction
A Checklist to Design Technology Upgrading Programs
Using the FAT Survey to Inform the Design and Implementation of Policies Supporting Technology Upgrading
Instruments to Support Technology Upgrading at the Firm Level
Summing Up
Notes
References
Appendix A. The Firm-level Adoption of Technology (FAT) Survey, Implementation, and Data Set
Boxes
Box I.1 Defining Technology and Business Functions
Box 1.1 The Technology Index at the Firm Level: An Example from the Food-Processing Sector in Senegal
Box 2.1 The Large Gap in Technology Sophistication between Formal and Informal Firms
Box 3.1 The Strong Sector Composition of the Use of Industry 4.0 Technologies
Box 3.2 The Closeness of Pharmaceutical Firms to the Technology Frontier
Box 6.1 Specific Barriers to the Use of Digital Platforms
Box 7.1 Digital Platforms Are Prone to Market Concentration and Dominance
Box 7.2 The Firm-Level Technology Diagnostic Tool
Box 7.3 Agriculture Extension: The Case of Embrapa
Box 7.4 Credit Guarantees for Technology through the Korea Technology Finance Corporation (KOTEC)
Box 7.5 The Difference between Vouchers and Grants
Box 7.6 Fraunhofer Institutes
Figures
Figure 1.1 While Countries Are Converging in Their Adoption of Technology, They Are Diverging in the Intensity of Use
Figure 1.2 Conceptual Framework for the Firm-level Adoption of Technology (FAT) Survey
Figure 1.3 General Business Functions and Their Associated Technologies
Figure 1.4 Share of Firms Using Technologies Applied to Various General Business Functions, All Countries.
Figure 1.5 Sector-Specific Business Functions and Technologies
Figure 1.6 An Example of the Technology Index
Figure B1.1.1 Comparing Technology Sophistication of a Large and a Small Firm in the Food-Processing Sector
Figure 1.7 Firms Vary Widely in the Status of Their Adoption of General-Purpose Technologies
Figure 1.8 Among Firms with Access to Computers and the Internet, a Large Share Relies Mostly on Less Sophisticated Methods to Conduct Business Functions
Figure 2.1 Estimated Technology Sophistication, by Country: Manufacturing
Figure 2.2 Estimated Technology Sophistication, by Country: Agriculture and Services
Figure 2.3 There Is a Strong Correlation between the Technology Sophistication of a Region and Regional Productivity
Figure 2.4 Cross-Country Differences in Technology Are Also Explained by the Number of Firms Using Sophisticated Technology
Figure B2.1.1 Technology Sophistication Is Significantly Greater among Formal Firms in Senegal
Figure 2.5 The Level of Technology Sophistication for General Business Functions Varies Greatly
Figure 2.6 Technology Sophistication Varies across Firm Size
Figure 2.7 The Likelihood of Adopting Frontier Technologies for General Business Functions Varies across Firm Size
Figure 2.8 The Likelihood of Adopting Frontier Technologies for Sector-Specific Business Functions Varies across Firm Size
Figure 2.9 Rank Orderings of the Distribution of Technology Sophistication Are Consistent across Select Countries
Figure 2.10 Most Productive Countries and Regions Have Firms That Use More Sophisticated Technologies on Average
Figure 2.11 Within-Firm Variance of Technology Sophistication Is Positively Associated with Regional Productivity
Figure 2.12 Technology Disruption in Telecommunications
Figure 2.13 Diffusion Curves, by Firm Size (Early versus Late Adopters).
Figure 2.14 Firms with Lower Levels of Technological Capabilities Tend to Overestimate Their Technological Sophistication
Figure 3.1 Firms in Agriculture Tend to Use More Sophisticated Technologies in Sector-Specific Business Functions
Figure 3.2 The Technology Gaps Are Larger in General Business Functions in Agriculture Compared to Sector-Specific Business Functions
Figure 3.3 Technology Sophistication for Fabrication in Manufacturing Is Low in Developing Countries
Figure B3.1.1 The Likelihood of Adopting Advanced Manufacturing Technologies Varies Widely across Sectors
Figure B3.1.2 More Capital-Intensive Agricultural Firms Are More Likely to Adopt Advanced Technologies
Figure 3.4 Differences in Technology across Countries Roughly Follow Income Differences in the Food-Processing Sector
Figure 3.5 Cross-Country Comparisons in Wearing Apparel Are Not So Large among Exporter Countries
Figure B3.2.1 Pharmaceutical Firms Are Relatively Close to the Technology Frontier, but There Is Significant Room for Improvement in Developing Countries
Figure 3.6 Digitalization of Sector-Specific Business Functions Is at an Early Stage in Retail Services
Figure 3.7 The Diffusion Curves of Newer Sector-Specific Technologies Do Not Suggest Leapfrogging
Figure 3.8 Tractor Ownership, Renting, and Digital Renting Do Not Suggest Leapfrogging through Digital Platforms
Figure 3.9 Across Sectors, There Is Large Heterogeneity in Outsourcing Sector-Specific Business Functions
Figure 3.10 Within Sectors, There Is Heterogeneity in the Degree of Outsourcing within Sector-Specific Business Functions
Figure 3.11 The Significant Correlation between Outsourcing Tasks and Technology Sophistication (All Business Functions) Is Restricted to Some Business Functions.
Figure 3.12 There Are No Significant Differences between Traders and Nontraders in Outsourcing Business Functions
Figure 4.1 Several Drivers Affect the Margins of Productivity Growth
Figure 4.2 Technology Sophistication Is Correlated with Labor Productivity
Figure 4.3 The Level of Technology Sophistication Varies Considerably across Agriculture, Manufacturing, and Services Sectors
Figure 4.4 Differences in Technology Sophistication between the Republic of Korea and Senegal Are Larger in the Agricultural Sector than in Nonagricultural Sectors and Are Driven Mainly by the Low Sophistication of Informal Firms
Figure 4.5 Firms Generally Keep the Same Number of Jobs When They Adopt New Technologies
Figure 4.6 Firms That Have Adopted Better Technology Have Increased Employment
Figure 4.7 More Sophisticated Technologies in Some Business Functions Are More Associated with Employment Growth
Figure 4.8 Firms with a Higher Level of Technology Are Creating More Jobs but Not Changing Their Share of Low-Skilled Workers
Figure 4.9 Firms Using More Sophisticated Technologies Pay Higher Wages
Figure 4.10 Technology Sophistication Contributes to Wage Inequality within Firms
Figure 5.1 Use of Internet and Adoption of Applications of Digital Technologies Vary by Sophistication and Firm Size
Figure 5.2 Digital Technology Intensity Varies across Sectors and Business Functions
Figure 5.3 Some Technologies Diffuse More Rapidly than Others
Figure 5.4 Market Concentration Poses a Challenge for the Supply of Digital Business Solutions
Figure 5.5 The Large Drop in Sales at the Beginning of the COVID-19 Pandemic Persisted for Many Firms, and the Loss Was Greater for Microenterprises and Small Firms
Figure 5.6 Demand for Digital Solutions Increased Greatly in Response to the COVID-19 Pandemic.
Figure 5.7 A Large Share of Businesses Digitalized during the COVID-19 Pandemic.