Technological Catch-up and Input-Output Efficiency: Empirical Evidence from High-Income Countries

Theoretical analysis suggests that higher income countries (HIC) can enhance their input-output efficiency by catching up with technological advancements. This process of technological diffusion allows HICs to adopt and implement cutting-edge technologies developed in frontier economies, leading to productivity gains and improved efficiency. Empirical evidence supporting this mechanism is presented in Table 8, which highlights the positive correlation between technological catch-up and input-output efficiency in HICs.