Technological Revolutions, Structural Change & Catching-Up

Technological revolutions, i.e., clusters of technologies that collectively have a transformational impact on the global economy, are rare events that dramatically influence the opportunities facing countries at different levels of development. A central suggestion in the relevant literature is that countries that manage to adopt the new technologies associated with a specific technological revolution benefit economically from it. This is also assumed to go together with a changing specialization pattern in international trade. The paper considers the empirical merits of these suggestions, drawing on GDP and trade data for a large number of countries on different levels of development from the post-second-world-war period. The empirical analysis reveals a major divide in the global economy between a group of modern, industrialized countries, specialized in technology-based production, and another group of countries, specialized in commodities and resource-based products, and lagging behind both in terms of technology and income. More to the future, the paper also discusses the extent to which a new green technological revolution, with renewable energy as a central element, is currently emerging, and what impact this possibly might have for catching-up, structural change and economic growth for countries at different levels of development, e.g., China.