Paper: arXiv 2604.11413

Authors: Vygintas Gontis, Lesya Kolinets

Abstract

The long-run convergence of developing economies toward advanced countries exhibits robust empirical regularities, yet the mechanisms underlying technological diffusion remain insufficiently specified in standard growth models. In this paper, we extend the neoclassical framework by introducing a micro-founded mechanism of technological transfer as a driver of total factor productivity. Rather than treating technological progress as exogenous or purely innovation-driven, we model productivity growth as a process of adopting existing technologies from the global frontier. The diffusion process is described using a herding-type interaction mechanism, in which agents transition from non-adopters to adopters under the combined influence of individual incentives and peer effects. This approach yields a tractable aggregate representation of TFP dynamics characterized by nonlinear convergence toward a moving technological frontier. We derive an explicit analytical solution and provide an interpretation of model parameters in terms of initial productivity, convergence limits, and diffusion speed. The model is evaluated using OECD productivity data for Central and Eastern European economies.

Complexity vs Empirical Score

  • Math Complexity: 6.5/10
  • Empirical Rigor: 5.5/10
  • Quadrant: Holy Grail — high math complexity, high empirical rigor

Why this score: The paper presents an innovative integration of a micro-founded herding interaction mechanism into a neoclassical TFP growth model, offering an explicit analytical solution for technology transfer. While the empirical validation using OECD data provides a solid foundation, further details on code and data preprocessing would enhance reproducibility.

Research Flowchart

  flowchart TD
    A["Research Goal:<br>Model TFP Convergence via Technological Adoption"] --> B["Framework:<br>Extend Neoclassical Growth Model"]
    B --> C["Mechanism:<br>Apply Herding-Type Interaction Model<br><i>(Adopters vs. Non-Adopters)</i>"]
    C --> D["Empirical Input:<br>OECD Productivity Data for CEE Economies"]
    D --> E["Computation:<br>Derive Analytical Solution for<br>Nonlinear TFP Convergence Dynamics"]
    E --> F["Key Findings:<br>Quantified Diffusion Speed, Convergence Limits,<br>& Frontier Catch-Up in CEE"]

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0 of 92 cited works are in the corpus; resolved via arXiv source bundles, Semantic Scholar and OpenAlex. Corpus-wide: 2518 linked papers.