Thor Berger (@thorberger.bsky.social)

Why do firms in poor countries not adopt new technologies? One reason: they're too small. We show in a recent paper that the "invention" of the the modern corporate form historically enabled marginal firms to grow and adopt new technologies. Paper forthcoming in the JEH and @voxeu.org column here:

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Institutional innovation and the adoption of new technologies A key barrier to economic development is that while new technologies can offer substantial productivity gains, firms in poorer countries often do not adopt them. This column uses firm-level data to track the adoption of the key technology of the 19th century – the steam engine – during Sweden’s rapid industrial take-off. Much like in many developing countries today, Swedish firms were generally too small to profitably adopt the new technology. The authors document the central role of an institutional innovation – the modern corporation – and demonstrate that when firms were given the opportunity to incorporate, they expanded and adopted steam technology. https://cepr.org/voxeu/columns/institutional-innovation-and-adoption-new-technologies