In the aftermath of World War II, the world’s economies exhibited very di¤erent rates of economic recovery. These di¤erences are mainly due to varying paths of total fac- tor productivity growth rather than to Neoclassical convergence. We estimate that two thirds of the residual variation in postwar economic recoveries not driven by con- vergence can be attributed to di¤erences in the technology adoption patterns across countries. This estimate is obtained by combining the implications of a theoretical model on technology adoption and growth with an instrumental variables analysis to estimate the causal e¤ect of technology adoption on economic growth. The instrument we use is the extent of postwar U.S. technical assistance received by a country.
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