policymakers demonstrate

52 Philippe Aghion and Ufuk Akcigit
1.5.2 Historical Wave Patterns
In the remaining part of this section we take a brief look at technological waves
and their diffusion from the US to other developed countries. In particular we
will point at the relationship between structural reforms and a country’s ability
to take advantage of the new IT wave. We define a technological wave as the diffusion
of new General Purpose Technologies (GPT). 19 General Purpose Technologies
are defined as generic technologies which affect most sectors of the
economy. Obvious examples include steam energy in the early and mid nineteenth
century, electricity and chemistry in the early twentieth century, and the
Information and Communication Technology revolution in the 1980s. While
innovation-led productivity growth goes beyond the diffusion of these generic
technologies, the speed at which a country adopts and diffuses a new General
Purpose Technology, reflects the country’s ability to innovate more generally.
It is therefore of interest to compare the diffusion patterns of General Purpose
Technologies across countries, especially when showing that lags in such diffusion
reflect market or institutional rigidities which hamper innovation-led
growth more generally.
Two Productivity Growth Waves
Using annual and quarterly data over the period 1890–2012 on labour productivity
and TFP for 13 advanced countries (the G7 plus Spain, The Netherlands,
Finland, Australia, Sweden and Norway) plus the reconstituted Euro
area, Bergeaud et al. (2014) (BCL thereafter) show the existence of two big
productivity growth waves during this period.
The first wave culminates in 1941, the second culminates in 2001. The first
wave corresponds to the second industrial revolution: that of electricity, internal
combustion and chemistry. The second wave is the ICT wave. This wave is of
smaller magnitude than the first one, and a big question is whether it has ended
in the US.
Diffusion Patterns
Figure 1.6 from Cette and Lopez (2012) shows that the Euro Area 20 and Japan
suffer from a lag in the diffusion of technological waves compared to the US.
Thus the first wave fully diffused to the current euro area, Japan and the UK
only post World War II. As for the second productivity wave, so far it does not
show up in the Euro Area or in Japan. Market rigidities contribute to explaining
such delays.
And through an econometric analysis, Cette and Lopez (2012) show that
this lag of ICT diffusion in Europe and Japan, compared to the US, is
explained by institutional aspects: a lower education level, on average, of
the working-age population and more regulations on labour and product