Institutional Barriers to Technology Di¤usion in Rural Africa

Why is Africa poor? Conversely, what has sustained the immense economic growth we have seen in the U.K., the U.S., and other developed countries over the last couple of centuries? While there is no single answer to these questions, technical change looms large among possible explanations. From Solow’s seminal work on growth theory to the “new growth economics”, technical change is the engine of long term growth. Whether you are looking at the phenomenal growth of Silicon Valley or the stagnant poverty of much of rural Africa, the congruence between economic growth and technical change is striking. Joseph Schumpeter (1961) describes technical change as having three stages: invention (the ...rst realization of an idea), innovation (the ...rst bringing of an invention to the market place), and di¤usion (the spread of the innovation through the market place). Technical change becomes economically important through di¤usion. Looking at rural Africa’s lack of robust economic growth and dearth of modern technology, it appears that technology di¤usion has failed there. I propose that this failure is partly due to institutional barriers to technology di¤usion and technical change. Ecology and history have conspired to create institutions that are hostile to new technologies. In this paper I present a model of an institutional environment in a stylized rural African village that prevents the di¤usion of a pro...table, low-risk agricultural technology. The rest of the paper is organized as follows. In the next section, I discuss the importance of technical change. In section 3, I describe the current