showed that investments in R&D have played a significant role in US long-run growth over the past decades [Okubo et al. (2006)].<sup>14</sup> With the catching-up process resulting from the convergence between traditional industrialized countries— old industrialized economies— and emerging markets economies—newly industrialized economies— on the technological and scientific ladder, these two groups of countries now account for most of the global trade, over 90%, a natural trend in a world where exports of manufactured goods grew almost exponentially over the past decades to account for as much of global trade. This resulting outcome— a consequence of converging technological and scientific paths between traditional industrialized economies and emerging markets economies— is consistent with standard neoclassical growth models. These models predict that countries with the same preferences and technology will converge to identical levels of income and asymptotic growth rates.

The process of convergence on the technology ladder is not uniform on the spherical space, however. The skewed distribution of technology diffusion has marginalized the Sub-Saharan African region, which is locked in a technology trap— whereby countries are overwhelmingly clustered around the lower scale on the technology ladder. With empirical evidence supporting the benefits of R&D for growth, the underlined Africa’s technology trap may be largely responsible for its poverty trap. In fact and to a large extent, the skewed distribution of growth at the global level is largely attributed to a limited geographical diffusion of technology [Easterlin (1981), Lucas (2007)]. The proposition below sums up the implications of a technology trap for stunted growth and skewed global distribution of income.

_Proposition 1_ : Let<sup>δ</sup> _tA_ ( _T_ ) and<sup>δ</sup> _tB_ ( _T_ ) represent the level of technology embodying state of knowledge and innovations which enable continued output expansion and growth even for unchanged quantities of the labor and capital inputs in the production processes in country A and B, respectively; where _T_ is technology endowment. Let Δ _t_<sup>δ</sup> _tA_ ( _T_ ) and Δ _t_<sup>δ</sup> _tB_ ( _T_ ) be technological jumps taking on real-value numbers,<sup>_Y_ˆ</sup> _TA_ , _t_ and _Y_<sup>ˆ</sup> _TB_ , _t_ be the estimated income level or aggregate output in these respective countries for a given stock of technology endowment _T_ at time _t_ .

> In other words, output growth in the country _A_ that is enjoying rapid technological advances will always grow faster as a result of continued productivity growth. Over time, the output and income gaps with country _B_ , caught in a technology trap, will continue to grow. Even holding other key determinants of growth constant in the two countries, long-run persistency under a technology trap will result in widening income gap in the technology deficit country where the structural patterns of growth may remain unchanged and per capita income abysmally low. (See the Technical Annex for proof of Proposition 1.)

> 14 This study proposes a new methodology based on “Research and Development Satellite Account” to estimate the effect of investment in R&D on US economic growth. According to this study, if R&D spending were included in the GDP as investment instead of as an expense, investment would be 11 percent higher and national savings rate would be 16 percent instead of 14 percent. Similarly, decades earlier, Solow (1957) attributed over 87 per cent of sustained increases in US gross output to technical changes.

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