Growth, Adoption of Technology and tradE – GRATE

These objectives are implemented in four projects. The first project («Dynamics of Technology Adoption and Growth:1800-2000», joint with Diego Comin) develops a unified framework for measuring technology diffusion and quantifying its contribution to economic growth. It consists of a micro-founded general equilibrium growth model in which growth is driven by the evolution of aggregate TFP. We use our framework to relate the evolution of the two adoption margins to the evolution of growth rates. This allows us to go beyond traditional growth accounting by explicitly quantifying how the evolution of income since 1800 can be accounted for by the evolution of the adoption margins. This is in contrast with the previous literature, which focused on relating technology levels to income levels.
The second project investigates the role of non-homotheticities in productivity growth and will be started once the first is completed.
In the third project we propose a novel model in which the knowledge necessary to adopt a technology is created within firms. This model can overcome the shortcomings of the previous theoretical literature. Namely, the fact that most technologies are embodied in goods whose prices do not differ very much across countries (Hsieh and Klenow, 2007) and that differences in educational attainment do not account for a very large share of cross-country differences in productivity (Klenow and Rodriguez-Clare, 1997).
The fourth project («Technology Adoption and the ICT revolution», joint with Sergi Basco) focuses on the study of the adoption of Information and Communication Technologies (ICT) with and without international trade. We distinguish theoretically between two components of the ICT revolution “computerization” of production (which saves in middle-skilled workers) and “unbundling” of production which allows production fragmentation. We then compare the predictions we obtain for ICTs with previous technologies, which have been skill-biased

The first project is close to completion. It has been presented extensively at international venues (NBER summer institute, Harvard U, Toronto, Dartmouth, UPF) and a draft is available («If technology has arrived everywhere, why has income diverged«). The fourth project is started, and a side-working has been produced that analyzes the role of the IT revolution on the organization of international production.

For the next semester I expect to produce a final draft of the first project and start the second one and have almost completed the fourth project as well. I will be visiting Stanford university next year, which will allow me to interact with top researchers and focus solely in research.

Two working papers: «If technology has arrived everywhere, why has income diverged« (with Diego Comin) and «International Mergers along the Global Supply Chain« (with Sergi Basco)
An article in the TSE magazine explaining my project with prof. Comin. It has also been cited in the New York Times economics blogs and other economics blogs.

This research proposal studies the interplay between technology adoption, economic growth and international trade by using direct measures of technology across countries and over time. The first objective of the project is to offer a unified framework for measuring technology diffusion and quantifying its contribution on economic growth. By combining economic theory with structural measurement, I study how technology adoption has influenced the growth process of different countries over time since the Industrial Revolution. This allows me to perform a novel “dynamic growth accounting,” studying how the evolution of the margins of adoption have influenced the evolution of income since 1800. The second objective is to study two particular channels driving technology adoption: firm formation and International Trade.

These objectives are implemented in four projects. The first project («Dynamics of Technology Adoption and Growth:1800-2000», joint with Diego Comin) develops a unified framework for measuring technology diffusion and quantifying its contribution to economic growth. It consists of a micro-founded general equilibrium growth model in which growth is driven by the evolution of aggregate TFP. In the model, TFP is the aggregate of the productivity of different technologies, which evolves endogenously and exhibits diffusion patterns that we can estimate using directly data on technology diffusion. We then estimate two different adoption margins: adoption lags and penetration rates. We use our framework to relate the evolution of the two adoption margins to the evolution of growth rates. This allows us to go beyond traditional growth accounting by explicitly quantifying how the evolution of income since 1800 can be accounted for by the evolution of the adoption margins. This is in contrast with the previous literature, which focused on relating technology levels to income levels. Our preliminary results suggest that there has been convergence in adoption lags across countries, while there has been divergence in penetration rates. This finding can help discipline different theories of fundamental causes of long-run development that operate through technology adoption. An additional novelty of this framework is to show that the transitional dynamics arising from technology diffusion, once simulated using the estimation results, are extremely protracted.

The second project («A generalized exploration of technology diffusion and growth», joint with Diego Comin) investigates whether an income elasticity of one in the demand for the output produced with different technologies is a reasonable assumption by allowing for non-homotheticities.

In the third project («Firm Knowledge Creation», joint with Thomas Chaney and Diego Comin), we propose a novel model in which the knowledge necessary to adopt a technology is created within firms. This model can overcome the shortcomings of the previous theoretical literature. Namely, the fact that most technologies are embodied in goods whose prices do not differ very much across countries (Hsieh and Klenow, 2007) and that differences in educational attainment do not account for a very large share of cross-country differences in productivity (Klenow and Rodriguez-Clare, 1997).

The fourth project («Technology Adoption and the ICT revolution», joint with Sergi Basco) focuses on the study of the adoption of Information and Communication Technologies (ICT) with and without international trade. We distinguish theoretically between two components of the ICT revolution “computerization” of production (which saves in middle-skilled workers) and “unbundling” of production which allows production fragmentation. We then compare the predictions we obtain for ICTs with previous technologies, which have been skill-biased.