Embodied Technology Diffusion: An Empirical Analysis for 10 OECD Countries

This paper examines the process of embodied technology diffusion in 10 OECD countries with the help of a methodology whereby the purchases of intermediate and capital goods act as carriers of technology across industries and countries. In terms of supply and demand of technology, it establishes that while innovations are developed mainly in a cluster of high technology manufacturing industries, a different cluster of industries in the services sector are the main acquirers of technologically sophisticated machinery and equipment. R&D performance is more concentrated (the top 5 industries account for between 60-80% of total) than technology use (the top 5 user industries account in most countries for 40-50% of total). In terms of the channels of technology diffusion, the share of technology obtained through capital investment is less than 50% of total acquired technology for every country, with the US leading in the diffusion of technology through capital investment. Imports are also an important method of technology acquisition: the share of acquired technology through imports has increased over time for all countries except Japan, while in intensity terms, imported technology is more important than domestic technology for all countries except the US, Germany and Japan. Bigger countries source less technology from abroad than smaller countries which depend on imports for more than 50% of their acquired technology. The US is the most important source of technology for all countries. Finally, the information technology cluster of industries is the main source of technology acquired in most countries. The importance of IT has increased over time; it is the fastest growing acquired technology cluster, with the share of other technology clusters is steady or declining.