APPROPRIATE TECHNOLOGY AND INCOME DIFFERENCES

Abstract

This article studies the relative productivity of skilled to unskilled workers across countries. Relative productivities are broken down into the human capital embodied in skilled workers and relative physical productivities (reflecting production techniques). I find that skilled workers from poorer countries embody less human capital and are also relatively less physically productive. Furthermore, results show that production techniques are inappropriate for most low‐income countries, and these countries experience large increases in GDP per capita by increasing the relative physical productivity of skilled to unskilled workers. This suggests that there are significant barriers to the adoption of skill‐complementary technologies.