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Globalization and Technology Absorption in Eastern Europe and the Former Soviet Union. Pradeep Mitra Chief Economist Europe and Central Asia Region World Bank
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Europe and Central Asia Region
Presentation at the plenary session of the conference on “Economic Modernization and Globalization” at the State University Higher School of Economics
Moscow, April 1, 2008
TFP growthTechnological progress is at the heart of income growth and poverty reduction
Average annual per capita income and total factor productivity growth,1990-2005
* Data for Europe & Central Asia cover period 2005/1995
Source: World Bank, Poncet 2006
Index of technological achievement
Source: World Bank, Global Economic Prospects (2008)
Years to diffuse,
% countries at 25% threshold
Source: World Bank using CHAT database (Comin & Hobijn, 2004)
Technological progress in developing and transition countries is mainly about absorbing and adopting technologies developed elsewhere. Trade, FDI and international co-invention are channels for innovation and knowledge absorption.
Exposure to foreign technology
Capacity to absorb
Source: Globalization and Knowledge Absorption in ECA (World Bank,2008), Global Economic Prospects (World Bank, 2008)
Foreign Direct Investment Helped EU New Member States Participate in Producer-driven Global Commodity Chains and Export Skilled Labor and Capital-Intensive Products.
Source: UN COMTRADE and IMF International Financial Statistics Database.
The structure of finance for fixed investment reflects greater reliance on retained earnings and banks at the expense of family/informal and other sources – a maturation of the business and financial sectors in the transition economies.
The Structure of Finance for Fixed Investment Is Maturing but Has Not Converged to That in Developed Economies
Source: Mitra, Muravyev, and Schaffer 2008, “Convergence in Institutions and Market Outcomes: Cross-country and Time-series Evidence from the BEEPS Surveys in Transition Countries.” World Bank, Washington, D.C.
Scores in science and mathematics in PISA 2006 were comparable to the OECD average in the countries that acceded to the European Union in 2004 and lower elsewhere.
Source: OECD PISA 2006
Inventions in the ECA 7 countries received more U.S. patent grants than did investors in China and India until the most recent years. However, there is a clear acceleration in India and China-based patenting in recent years.
U.S. Patent Grants for the ECA7 vs. China and India
Source: Authors’ calculations based on the U.S. Patent and Trademark Office CASSIS CD-ROM, December 2006 version. The graph compares counts of patents in which at least one inventor is based in one of seven ECA countries, India, or the People’s Republic of China. The ECA 7 are Russia, Hungary, Poland, Slovenia, the Czech Republic, Bulgaria, and the Ukraine.
International co-invention (ECA 7 patent grants generated by international teams of inventors) has expanded greatly compared to purely indigenous patents (ECA 7 patent grants generated by inventors based within a single country).
Indigenous Patents and Co-Inventions in the ECA 7, 1993-2006
Source: Authors’ calculations based on the U.S. Patent and Trademark Office CASSIS CD-ROM, December 2006 version. The ECA 7 are Russia, Hungary, Poland, Slovenia, the Czech Republic, Bulgaria, and the Ukraine.