4 evidences that technological development is related to economic knowledge flows in 2022

The idea that economic development is more related to the creation of knowledge and the generation of new ideas than to the possession of natural resources is evidently accepted today. It is the ability to generate knowledge and market it that is explaining the differences in productivity and economic growth between countries.

The technological gap between developed economies and poor countries has always been very wide, but the diffusion of knowledge and technology is allowing this gap to be reduced more and more. And this is possible because, in an increasingly digitalized global economy, new knowledge or innovations spread faster both within countries and across borders.

But what is the diffusion of knowledge and how does this phenomenon occur? To begin with, the concept of technology transfer must be defined, which is nothing more than the transfer of technology between two entities, for example, from one company to another. The diffusion of technological knowledge is a broader concept, which has to do with the social impact produced by this technological transfer.

The speed with which technological knowledge spreads is therefore of enormous importance. For example, paper did not reach Europe until a thousand years after the Chinese invented it, and we already know the impact that this invention had on the Western world.

Nowadays the globalization and the Internet make it possible to speed up the diffusion of technological knowledge. The Internet has a huge impact on the speed of data dissemination and transfer in today’s world. Everyone knows the spread of 5G technology, for example. Thanks to this technology, productivity and data transfer speed will increase several times. And it applies to literally anything from e-commerce to online casinos.

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In the latter case, it also plays a big role because the new technology improves the user experience, people can have a better gaming experience, for example, in live roulette, due to the transfer of live data and, above all, everything, quickly and safely.

Now anyone can access any application that helps them manage their finances, teaches them how to exercise or trains them to create a better strategy in games. And all this from anywhere in the world through your smartphone.

Until recently, the production of knowledge and technology was concentrated in the large developed economies. This has recently changed since, with globalization and technological advances, knowledge spreads at great speed, which is opening up opportunities for emerging countries to adopt these technologies and develop their own from them.

The flow of knowledge increases technological development

As has been said before, the flow of knowledge both within the country and beyond the borders increases technological development. Four ways in which this occurs are described below.

  1. When applying for a patent, prior knowledge related to the invention must be documented. This number of cross-patents is an indicator of knowledge flows. Based on these indicators, it is known that there has been a great change in the last decade in terms of collaboration in research and development with Asian countries. Today China is the first country of supply and technological collaboration with Western countries.
  2. Trade and foreign investment are two important channels for the dissemination of knowledge and technology between countries. There are flows of royalties, license payments between parent companies, parent companies transfer technologies to local subsidiaries, etc.
  3. Emerging countries have managed to capitalize on greater access to innovation and knowledge flows, improving their capacity for innovation.
  4. The technological knowledge that flows from a foreign company or entity to local companies is often used by them to increase their productivity levels.
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As we have seen, it is extremely important to promote innovation and the dissemination of new technologies, and respect for intellectual property rights is crucial for this. If emerging countries wish to take advantage of technology transfer from transnational corporations based in developed countries, they must strive to create a legal framework that guarantees intellectual property.

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