LAUSR

Abstract This paper examines the role of diffusion barriers in explaining differences in technological innovation across countries through an index of economic complexity. The barriers are captured by genealogical distance from the world’s technology frontier. We hypothesize that greater the genetic distance between a country’s population and the technology innovator the lower will be levels of technological innovations. Utilizing data for 100 countries, our empirical estimates offer solid support for the negative influence of genetic distance from the global frontier on innovation. A number of sensitivity checks also confirm that our findings are robust. Overall, the evidence lends strong support to the barriers effect of genetic distance from the frontier whereby it prevents the diffusion of productivity enhancing innovations across countries by affecting the country’s capability to imitate and adopt frontier innovations and technologies.