Technology and the Economy: The Case of Falling Productivity Growth in the 1970s

The concept of transfer of technology, or of diffusion of innovations, implies a distinction between the creation of new know-how and its spread through the economy. The first may be described as the activity on the ‘technological frontier’. This is usually identified with the innovators and could be defined as ‘best practice’ or latest know-how. The meaning of diffusion is self-explanatory. For some economists the distinction is connected with the idea that the technological frontier is created autonomously; the innovations enter the economy from outside whereas the diffusion is subject to economic forces and considerations (Maddision, 1979; Gomulka, 1979).