Cover -- Title Page -- Contents -- Foreword -- Acknowledgments -- Abbreviations -- Overview -- Introduction -- Technological achievement and diffusion in developing countries -- Policy needs to actively promote technological adoption and adaptation as well as nurturing domestic innovative capacity -- The level of technological achievement in developing countries has converged with that of high-income countries over the past 15 years -- The level of technology in developing countries reflects the pace at which technology diffuses within countries -- A framework for understanding the diffusion of technology within developing countries -- Increased openness to trade, FDI, and diaspora contacts have boosted technological diffusion -- Better macroeconomic and educational policies have improved absorptive capacity in developing countries… -- …but improvements in the business climate and governance lags -- Some policy directions -- Note -- References -- CHAPTER 1 Prospects for Developing Countries -- Introduction -- Growth outlook -- Risks -- Financial markets: Needed correction or major disruption? -- Global growth -- The high-income countries -- The developing countries -- Developing region perspectives -- World trade -- Inflation and commodity markets -- Risks and uncertainties: Danger of a banking crisis and a U.S. recession -- Long-term prospects and poverty forecasts -- A potential for catching up -- Poverty declines significantly in the baseline, though not uniformly -- Agricultural productivity has important poverty implications for low-income countries -- Notes -- References -- CHAPTER 2 Technology and Technological Diffusion in Developing Countries -- Introduction -- The role of technology in development -- Technology is both a critical determinant and an outcome of rising incomes.

Technological progress can lower costs, improve quality, create new products, and help reach new markets -- Even relatively simple technologies can have far-reaching development impacts -- Despite these advantages, technological change can also be disruptive -- Measuring technology in developing countries -- Scientific innovation and invention -- The intensity of innovation is closely related to per capita income … -- … although the Europe and Central Asia region is an outlier -- Penetration of older technologies -- Affordability limits the penetration of electrical networks in some countries … -- … and restricts access to efficient transportation … -- … and air transport and telephones -- The adoption and adaptation of old technologies varies by sector -- Older technologies have become widely diffused in many countries, but large disparities remain -- Penetration of recent technologies -- Exports of high-tech goods are only loosely related to incomes -- Personal computers have diffused relatively slowly … -- … while diffusion of the Internet and mobile phones has been extremely rapid -- The diffusion of new technologies has encouraged rapid growth in business services -- Logistics represent an important process technology -- Evaluating overall technological progress -- Summary indicators for scientific innovation and technology penetration -- A statistical approach to summarizing technological progress -- The relationship between technological achievement and income varies depending on the dimension observed -- New technologies are not as diffused as old technologies, but the gap between income groups is smaller -- Overall technological achievement -- Countries with similar income levels can have very different levels of technological achievement -- Technological convergence appears to be constrained by weak absorptive capacity in some regions.

Technological diffusion over the long term -- Slow diffusion within countries reflects a nonlinear process -- Conclusion -- Technical Annex: Construction of the summary indexes -- Estimating weights for variables using principal components -- Data preparation -- Applying principal components analysis to technology -- Notes -- References -- CHAPTER 3 Determinants of Technological Progress: Recent Trends and Prospects -- Introduction -- Drivers of technological progress: A framework -- Exposure to external flows interacts with domestic capacity to diffuse technology -- Increasing returns and spillover effects can magnify these effects… -- … but a lack of financing can stymie innovation -- Policy should not impede innovative firms -- External transmission channels -- Trade -- The potential for technology transfer through imports has risen -- Developing countries' high-tech imports have increased -- Capital goods imports have also increased -- Exports of technological goods have also expanded -- Overall exposure to foreign technologies has increased -- Foreign direct investment -- Foreign investors bring both equipment and know-how -- FDI may generate technology spillovers -- Outsourcing decisions, domestic policies, and absorptive capacity all affect spillovers -- Spillovers might be highly concentrated in certain regions within a country -- Developing countries also purchase foreign high-tech firms -- Developing countries can also license foreign technologies -- International migration -- The diaspora is a major source of skills and capital -- Diaspora networks and returnees help promote technology adoption -- Remittances can promote technology diffusion by making investments more affordable -- A summary index of trends in the exposure of developing countries to external technology -- Nurturing technological adaptive capacity.

Governance and the business climate -- Political and macroeconomic stability have improved countries' ability to exploit technology -- A weak business environment and poor governance can impair technological progress -- Basic technological literacy -- Low incomes and poor health impair skill formation for technological progress -- Illiteracy is declining, but still blocks countries' ability to absorb new technologies -- Rising primary school completion rates should drive further improvements in adult literacy -- Financing innovative firms -- Limited financial intermediation restricts technology diffusion -- Barriers to the finance of high-risk activities severely impede the spread of technology -- Supporting innovative firms with R&D and outreach -- R&D efforts to adapt existing technology to local conditions are expanding -- Firm-level R&D is most effective in promoting technological progress -- Outreach plays a critical role in bringing technology to the broader population -- Direct government policies to promote technology -- Government policy can play a central role in helping firms overcome market failures -- But government efforts at promoting technological champions have often failed -- Imitation opportunities may boost technological diffusion, but have costs -- Governments can also promote technological progress in their own operations … -- … and encourage improved technology through product standards -- Coherent policies and committed government leadership are critical for technological progress -- An overall index of technological absorptive capacity -- Conclusion -- Notes -- References -- Appendix: Regional Economic Prospects -- East Asia and the Pacific -- Recent developments -- Medium-term outlook -- Risks -- Europe and Central Asia -- Recent developments -- Medium-term outlook -- Risks -- Latin America and the Caribbean.

Recent developments -- Medium-term outlook -- Risks -- Middle East and North Africa -- Recent developments -- Medium-term outlook -- Risks -- Notes -- South Asia -- Recent developments -- Medium-term outlook -- Risks -- Sub-Saharan Africa -- Recent developments -- Medium-term outlook -- Risks -- Back Cover.