Inter-temporal correlation structure of cross-country technology diffusion: an application of the generalized lotkav olterra model

Abstract

One can unequivocally concede that we exist in a world of ‘unequal’ microeconomic units, with the disparities in the technological prowess among various nations serving as a prime example of this hegemony. Given the dense network of trade & knowledge flow the different countries find themselves embedded in, the interdependencies among the countries are in fact primarily non-linear with spill-over effects of different macroeconomic variables contributing to the heterogeneity. One such critical variable would be technological evolution wherein a set of countries would be more evolved than the others, wherein the countries belonging to the latter category (imitators/predators) would attempt to pilfer the know-how of the former category (innovators/prey). Taking a leaf out of evolutionary biology, it is indeed possible to model the interactions among a large set of countries, comprising of both predators and preys, so as to map the impact of the trickle-down effects of technology with regard to its effects on partner economies. Thus, by leveraging upon the Lotka Volterra model, this report intends to not only trace the lagged diffusion of technology on a global scale, but also quantify the cross-correlation structure for a system of countries. The results pertaining to the stated simulations for the annual per capita GDP data of the G-7 countries are presented in this report, coupled with a demystification of the implications entailed therein.