Innovation is one of the most important drivers of economic development. Even in developing countries, households have access to a wide array of new technologies. However, factors affecting households' technology adoption decisions remain poorly understood. Using data on solar microgrid adoption from rural India, we investigate the determinants of household technology adoption. We offer all households identical solar products to avoid bias from product differentiation. Households pay a monthly fee for technology use, allowing us to abstract away from credit constraints as a barrier to adoption. The results show that household expenditures and savings as well as the household head's entrepreneurial attitude are strong predictors of adoption. In contrast, past fuel expenditures, risk acceptance, and community trust are not associated with technology adoption decisions. These findings suggest new directions for research on the microeconomics of household technology adoption, which is critical for sustainable development among the poor in developing countries.
Many of the main problems facing developing countries today and tomorrow--growth, poverty reduction, inequality, food insecurity, job creation, recovery from the COVID-19 pandemic, and adjustment to climate change--hinge on adopting better technology, a key driver of economic development. Access to technology is not enough: firms have to adopt it. Yet it is precisely the uptake of technology that is lagging in many firms in developing countries. Bridging the Technological Divide: Technology Adoption by Firms in Developing Countries helps open the “black box†? of technology adoption by firms. The seventh volume in the World Bank Productivity Project series, it will further both research and policy that can be used to support technology adoption by firms in developing countries.
Should policymakers in developing countries prioritize foreign technology adoption over domestic innovation? How might this depend on development stages? Using historical technology transfer data from Korea, we find that greater productivity gaps with foreign firms correlate with faster productivity growth after adoption, despite lower fees. Furthermore, non-adopters increased patent citations to foreign sellers, suggesting knowledge spillovers. Motivated by these findings, we build a two-country growth model with innovation and adoption. As the gaps narrow, productivity gains and spillovers from adoption diminish and foreign sellers strategically raise fees due to intensified competition, which renders adoption subsidies less effective. Korea’s shift from adoption to innovation subsidies substantially contributed to growth and welfare. We also explore the optimal policy and its interaction with import tariffs.
This book examines the role that Information and Communication Technologies (ICTs) play in growth and economic development promotion, specifically for developing countries. It highlights multiple methodologies for quantifying the impact of ICTs. This includes quantitative and qualitative methods, but also novel, conclusive and informative methodological approaches for measuring ICTs influence on economic development. The book highlights trends, perspectives, and success stories for different developing countries. ICTs bring new business models, innovations, capital-labor substitution, improved goods and services to developing markets. Because they can spread rapidly, with little cost and require minimal skills for usage, ICTs create a solid background for social and economic gains. They enable significant reduction in information asymmetries, which improves access to economic activities for multitude of agents, fostering participation, inter alias in labor market of disadvantaged societal groups. After almost two decades of rapid diffusion of ICT in developing world, this book seeks to assess the real benefits and consequences of ICTs adoption in developing countries. The chapters use broad, real-world based evidence to provide a better understanding of the precise nature of new technologies and their impact of the country`s economy and society.
Abstract: The adoption of new agricultural technologies may be discouraged because of their inherent riskiness. This study implemented a randomized field experiment to ask whether the provision of insurance against a major source of production risk induces farmers to take out loans to invest in a new crop variety. The study sample was composed of roughly 800 maize and groundnut farmers in Malawi, where by far the dominant source of production risk is the level of rainfall. We randomly selected half of the farmers to be offered credit to purchase high-yielding hybrid maize and improved groundnut seeds for planting in the November 2006 crop season. The other half of the farmers were offered a similar credit package but were also required to purchase (at actuarially fair rates) a weather insurance policy that partially or fully forgave the loan in the event of poor rainfall. Surprisingly, take up was lower by 13 percentage points among farmers offered insurance with the loan. Take-up was 33.0 percent for farmers who were offered the uninsured loan. There is suggestive evidence that the reduced take-up of the insured loan was due to the high cognitive cost of evaluating the insurance: insured loan take-up was positively correlated with farmer education levels. By contrast, the take-up of the uninsured loan was uncorrelated with farmer education.
This dissertation is to connect empirical findings with grounded theoretical analysis on two economic issues. One of the studies investigates industrial productivity by fitting in a theoretical model with quantitative methods. In addition, I explore how a demographic policy in China brings forth a profound impact in all aspects of the fast-growing economy. The first chapter, "Casual Labor, Uncertainty, and Technology Adoption in Agriculture," examines why both the technology adoption rate and labor productivity in agriculture are low in the context of developing countries. A two-stage model is built to explain how the availability of casual (non-permanent) labor ex-post, in the presence of uncertainty may affect agents' ex-ante technology choices. A higher degree of uncertainty induces the agents to choose traditional production technology that relies heavily on the labor input instead of using any modern intermediate inputs. By calibrating the model to fit the micro data in Tanzania, I show that this proposed framework can be used to account for two targets of interest: low aggregate labor productivity and the low technology adoption rate. Counterfactual exercises suggest that the severity of uncertainty before the harvest stage and the abundance of casual labor are the potential drivers for the two targets to be explained. The second chapter, "Growth in a Patrilocal Economy: Female Schooling, Household Savings, and China's One-Child Policy," is co-authored Wei-Cheng Chen. We develop a model of parental education decision to analyze how a population control policy affects saving and schooling in a patrilocal society, where sons are responsible to support aged parents more than daughters. Parent's investment in education depends on the degree of parental altruism and the need for old-age security. A tightened population control policy makes parental altruism more important relative to the security motive and shortens gender gap in education. We also take another crucial intergenerational incentive for daughter's education into account, since lower fertility promotes female labor market participation and increases the value of female education. Our model explains why the Chinese economy under the "One-Child Policy'' exhibits a rapid growth of relative female schooling. Moreover, this chapter also articulates the relationship between household savings and demographic changes based on a general equilibrium analysis, which has been discussed extensively in recent years to explain the China's saving puzzle.
This book investigates the relationships between economies of scale in food consumption and a number of socio-economic and demographic characteristics of households and household behavioural choices since food is the major share of household expenditure for poor households. The characteristics considered comprise household size, location, income, and gender of the head of household while the behavioural choices considered comprise the decision to consume home-grown food and the decision to adopt domestic technology to aid food preparation and consumption. The book proposes two theoretical models to rationalize the role of the consumption of home-grown food and the adoption of domestic technology in enhancing economies of scale in food consumption. Econometric models are also used to empirically test the validity of the two theoretical models while adjusted poverty estimations are derived numerically using the estimated equivalence scales. Although data used in applying these techniques are based on four Household Income and Expenditure Surveys conducted by the Department of Census and Statistics (DCS) in Sri Lanka, the methodology can be used for similar analysis in relation to any other country.
Developing countries are implementing policies expanding the adoption and productive use of digital technologies to advance economic development and inclusion. Yet, systematic analyses of the welfare and distributional effects of digital technologies on households and individuals-especially broadband mobile internet-remain limited. To fill this knowledge gap, this paper proposes a simple analytical framework to offer insights on how more equitable access to digital technologies affects household welfare, which can be organized into four areas: (1) determinants of adoption of digital technologies; (2) distributional effects of increasing competition in the information and communication technology industry; (3) welfare and poverty effects of coverage and access to digital technologies; and (4) local economic effects of access to digital technologies. To illustrate the relevance and replicability of this framework across developing countries, the analysis is carried out for Senegal, a country that has recently experienced a rapid expansion in digital infrastructure.
Much has been written on the determinants of input and technology adoption in agriculture, with issues such as input availability, knowledge and education, risk preferences, profitability, and credit constraints receiving much attention. This paper focuses on a factor that has been less well documented-the differential ability of households to take on risky production technologies for fear of the welfare consequences if shocks result in poor harvests. Building on an explicit model, this is explored in panel data for Ethiopia. Historical rainfall distributions are used to identify the counterfactual consumption risk. Controlling for unobserved household and time-varying village characteristics, it emerges that not just ex-ante credit constraints, but also the possibly low consumption outcomes when harvests fail, discourage the application of fertilizer. The lack of insurance causes inefficiency in production choices.
