If Technology has Arrived Everywhere, why Has Income Diverged?

We study the cross-country evolution of technology diffusion processes. Using data from the last two centuries for twenty-five major technologies, we document two new facts: there has been convergence in adoption lags between rich and poor countries, while there has been divergence in long run penetration rates, once technologies are adopted. We show that the evolution of aggregate productivity implied by these trends in technology diffusion accounts for the bulk of the evolution of the world income distribution in the last two hundred years. In particular, initial cross-country differences in adoption lags account for a significant part of the cross-country income divergence in the nineteenth century. The divergence in penetration rates accounts for the divergence during the twentieth century.