Dynamics of technology gap between OECD and African countries: A structural estimation

Abstract

Like other technology gap models, the application of “the Latin American Structuralism” model in OECD & African countries reveals that the technology spillovers due to the technology gap is not as easy task as it was presumed by the mainstream growth theories. Using the per capita GDP gap between the OECD and sample African countries as a proxy for the technology gap, this paper indicates that the technology gap growth rate has been further soaring instead of revealing the normal falling tendency. The finding implies the absence of “automatic catch-up tendency” between the homogenous technology producing countries (OECD) and the heterogeneous technology extracting countries (Africa) and the “weak effort” African countries exerted so far to benefit from the technology gap in the form of spillovers from technology imitation.Among African relative sectoral growth contributions, the relative growth contributions of the agriculture and service sectors negatively affect the technology gap growth rate. However, they cause the equilibrium technology gap to further soar. It suggests the need for structural transformation in Africa. The two-steps difference GMM model is used on a panel of 34 African countries for ten years (2005–2014).