Technology and Economic Development: A Comparative Perspective

This paper was prepared as a background document for the forthcoming World Industrial Development report for UNIDO in 2001. While the link between technological knowledge and economic development is difficult to unravel, nonetheless, technological disparities play an immensely important role in explaining the diversity of development experience. Here we explore recent advances in the study of innovation processes, viewed through two different lenses, neoclassical and evolutionary theories of the firms. The paper concludes with a discussion of the implications for innovation policy in developing economies. We conclude that a central task of policy is to create a rich ecology of organisational and institutional support for the absorption of knowledge and the generation of innovative capabilities.