Technology Transfer and External Shocks : Developing Country Growth from 1960 to 1990

The post-war growth experience of developing countries is characterised by three main features. Firstly, enormous divergence between the best and worst performers. Secondly, low persistence in growth rates across time, and finally a general decline in the average growth rate across all countries. Our evidence suggests that these patterns in the data are consistent with a technological growth model that is subject to random shocks. External shocks explain the variability of LDCs productivity growth rates, but only over the short-run: within 5 years; whereas faster growth of the technical frontier in innovating countries is associated with faster productivity growth in LDCs on average over the long-run. There are good reasons for believing that this reflects technology spillovers, and not simply demand effects