Monday 18 February 2008

Technology and emerging markets

As far as technology getting into emerging markets is concerned, The Economist magazine argues that it is spreading faster than it ever has,
The upshot is that technology is spreading to emerging markets faster than it has ever done anywhere.
They make the case based on work done by the World Bank who looked at how much time elapsed between the invention of something and its widespread adoption. Widespread adoption they defined as when 80% of countries that use a technology first report it.
For 19th-century technologies the gap was long: 120 years for trains and open-hearth steel furnaces, 100 years for the telephone. For aviation and radio, invented in the early 20th century, the lag was 60 years. But for the PC and CAT scans the gap was around 20 years and for mobile phones just 16. In most countries, most technologies are available in some degree.
But the Economist also points out that
In almost all industrialised countries, once a technology is adopted it goes on to achieve mass-market scale, reaching 25% of the market for that particular device. Usually it hits 50%. In the World Bank's (admittedly incomplete) database, there are 28 examples of a new technology reaching 5% of the market in a rich country; of those, 23 went on to achieve over 50%. In other words, if something gets a foothold in a rich country, it usually spreads widely.

In emerging markets this is not necessarily so. The bank has 67 examples of a technology reaching 5% of the market in developing countries—but only six went on to capture half the national market. Where it did catch on, it usually spread as quickly as in the West. But the more striking finding is that the spread was so rare. Developing countries have been good at getting access to technology—and much less good at putting it to widespread use.
So its clear that absorption of technology is one thing, diffusion is another.

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