Abramovitz: Catching Up, Forging Ahead and Falling Behind

Abramovitz, M., 1986. Catching Up, Forging Ahead, and Falling Behind. Journal of Economic History, 46(2), 385-406.

“A widely entertained hypothesis holds that, in comparisons among countries, productivity growth rates tend to vary inversely with productivity levels” (385). Convergence happened most clearly in the quarter century following WWII. This article puts forth a hypothesis that convergence takes place because of catch-up phenomena.

The story of convergence is quite a simple one, especially after WWII: The US had amassed such a degree of technology that was not available in other countries and, once the peace was established, other nations were able to achieve the gains from that technology without having to go up the steep learning curve of an initial adopter. When you are further back in your “technological age” (which correlates to the actual age of the technology chronologically), you have more potential to catch up. As you get closer to the hegemon, this growth slows.

Four extensions to the basic idea of technological convergence are listed:

1.) “The same technological opportunity that permits rapid progress by modernization encourages rapid growth of the capital stock parly because of the returns to modernization itself…So—besides a reduction of technological age towards chronological age, the rate of rise of the capital-labor ratio tends to be higher”

2.) “Growth of productivity also makes for increase in aggregate output”

3.) “Backwardness carries an opportunity for modernization in disembodied, as well as in embodied, technology”

4.) “If countries at relatively low levels of industrialization contain large numbers of redundant workers in farming and petty trade, as is normally the case, there is also an opportunity for productivity growth by improving the allocation of labor” (387).

Countries who have the greatest opportunity to gain from technological convergence are those that are “socially advanced” but technologically backwards.

Restatement of hypothesis: “Countries that are technologically backward have a potentiality for generating growth more rapid than that of more advanced countries, providing their social capabilities are sufficiently developed to permit successful exploitation of technologies already employed by the technological leaders. The pace at which potential for catch-up is actually realized in a particular period depends on factors limiting the diffusion of knowledge, the rate of structural change, the accumulation of capital, and the expansion of demand. The process of catching up tends to be self-limiting, but the strength of the tendency may be weakened or overcome, at least for limited periods, by advantages connected with the convergence of production patterns as followers advance towards leaders or by an endogenous enlargement of social capabilities” (391).

Abramovits then explores historical data related to the phenomena of catching up.

Catching-up is a phenomena that occurs when some are behind technologically but where they have achieved sufficient social capital to make the adoption of new technologies feasible.