Social Development

Diego Comin: Entrepreneurship, Technology and Economic Development

Editor’s Note: Diego Comin is an Associate Professor of Business Administration at HBS since 2007. He received his B.A. in Economics in 1995 from the University Pompeu Fabra, Barcelona, Spain and his PhD in Economics from Harvard University in 2000. Between 2000 and 2007, Comin has been Assistant Professor of Economics at New York University. He is also Research Fellow at the Center for Economic policy Research and Faculty Research Fellow in the National Bureau of Economic Research’s Economic Fluctuations and Growth Program. Comin has also been fellow for the INET and Gates foundations and consultant for the World Bank, IMF, Federal Reserve Bank of New York, Citibank, and the Economic and Social Research Institute (ESRI) of the government of Japan.

You can read his full bio from here. To learn more about his research, ideas and knowledge, check out this this this and this.

eTalk’s Niaz Uddin has interviewed Diego Comin recently to gain insights about entrepreneurship, technology and economic development which is given below.

Niaz: Dear Diego, thank you so much for joining us in the midst of your busy schedule. We are very thrilled and honored to have you at eTalks.

Comin: The pleasure is mine.

Niaz: You’ve received your bachelor degree in Economics in 1995 from Pompeu Fabra University, Barcelona, Spain and PhD degree also in Economics from Harvard University in 2000. Between 2000 and 2007, you were the Assistant Professor of Economics at New York University. And you have been Associate Professor of Business Administration at HBS since 2007. You’re also an honorable Research Fellow at the Center for Economic policy Research and Faculty Research Fellow in the National Bureau of Economic Research’s Economic Fluctuations and Growth Program. At the very beginning of our interview can you please tell us something about ‘Entrepreneurial Economics’?

Comin: Entrepreneurial economics is the area of economics that studies the causes and consequences of entrepreneurship.

Niaz: How would you define the connection and contribution of economists and entrepreneurs in the entrepreneurial economics to accelerate economic growth?

Comin: Often, when entrepreneurs found new companies they tend to utilize new technologies in production accelerating their diffusion. In other instances, new technologies are created to develop and commercialize new technologies. Hence, entrepreneurship may foster economic growth both by contributing to the creation and to the diffusion of new technologies.

Niaz: You’ve been working for so long with primitive technology dataset. What does actually the primitive technology dataset measures?

Comin: I should refer the reader to my paper with Erik Gong and Will Easterly “Was the Wealth of Nations Determined in 1000BC?” at the American Economic Journal: Macroeconomics (July, 2010). Basically, it measures whether certain significant technologies were present in the geographic areas that correspond to modern-day countries long time ago. For example, printing presses in 1500 AD.

Niaz: Can you please share your knowledge with us about Primitive Technology?

Comin: There are basically three key findings. First, cross-country differences in technology adoption were very large in the distant past (i.e., 1500 AD, 0 and 1000BC). Second, past levels of technology are highly correlated to current levels of technology. In particular, the levels of technology of our ancestors in 1500AD predict 50% of current cross-country differences in productivity or technology. Finally, the reason for this humongous persistence is that some technological knowledge associated with the adoption of historical technologies helps adopt current technologies.

Niaz: Can you please tell us about the diffusion of technology?

Comin: The moment technologies are invented, in principle they are ready for people around the world to use. However, most people and companies do not use them right away. Technology diffusion is the field that studies how and why technologies are adopted the way they are.

Niaz: What are the factors that affect the shape of the diffusion of technology?

Comin: There are several factors that may affect the shape of diffusion curves. How long ago a technology first arrived to a country, the level of income and its evolution, how intensively the technology is eventually used in the country, the rate of improvement of the technology and the productivity gains associated to these improvements, the potential complementarities of one technology with others, and the diffusion of technology in neighboring countries.

Niaz: Your research consists on studying the process of technological change and technology diffusion both across countries and over time. As you know, cutting edge technology, super innovation and evaluation of social media have been changing everything. We are in the golden era of Digitalization. Economy is also transforming to Digital Economy. Can you please tell us about Digital Economy? What has changed and what’s new in this digital economy?

Comin: The digital economy lowers the costs of transferring information. And by making information cheap it reduces the costs of bringing new technologies to all the corners of the world. However, it is important to be aware that the reduction in the costs of transferring information precedes (by a lot) the digital economy. One advantage of having direct measures of technology that span 200 years is that one can uncover long-term trends that are not obvious to the naked eye. When looking at my data, I observe that the acceleration in the speed of diffusion of technologies started with the industrial revolution and it has been unraveling smoothly since then.

Niaz: Things are not happening in the same ways all over the world. Digital Divide, Broadband Connection, Availability of Technology, Lacking of Knowledge and some other constraints have been putting under developed, developing and poor countries behind. How large is cross-country differences in technology adoption? How can underdeveloped, developing and poor countries take optimum advantage of digitalization?

Comin: That question raises an interesting point. Though technologies are more readily available in all countries than 100 or 200 years ago, the gap in the intensity or use (or penetration rates) that we observe between rich and poor countries has widened. (Marti Mestieri and I document that in a recent paper “If Technology Has Arrived Everywhere, Why has Income Diverged?” NBER wp#19010.) It is not easy to explain why this has been the case but it seems that the super low cost of transmitting information are not sufficient for a large number of potential users to know how to apply new technologies (in developing countries). Information is not the same as Knowledge.

Niaz: In near future, I hope we won’t have that much difference in our online and offline life. At the same time, we have started to live a life that is more likely science fiction. Living such an exciting era what do you think about the future of digital economy?

Comin: It seems safe to conjecture that in the future (and probably in the present too) the constraint will not be information but our ability to do something with it. I guess that the challenge for the digital economy will be to help on that front.

Niaz: What are you economic advice to young entrepreneurs, startups founders and CEOs? What are the things they should always keep in mind to grow and excel with their startups?

Comin: I think it is important to be always aware of what’s the core of the company; the area/activity where the company is really great. And always evaluate how actions or strategies affect/complement the core.

Niaz: Any last comment?

Comin: Both as a fundamental driver as well as a manifestation of other drivers, technology is key for the economy and society.

Niaz: Dear Diego, thank you so much for sharing us your invaluable ideas knowledge and insights. We are wishing you very good luck for all of your future endeavors.

Comin: Thanks very much. I also wish you good luck with eTalks.

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Further Reading:

1. Philip Kotler on  Marketing for Better World

2. F. M. Scherer on Industrial Economy, Digital Economy and Innovation

3. Stephen Walt on Global Development

4. Robert Stavins on Environmental Economics

Stephen Walt: Global Development

Editor’s Note: Stephen Walt is the Robert and Renee Belfer Professor of International Affairs at Harvard Kennedy School. He has been a Resident Associate of the Carnegie Endowment for Peace and a Guest Scholar at the Brookings Institution, and he has also served as a consultant for the Institute of Defense Analyses, the Center for Naval Analyses, and the National Defense University.

Professor Walt is the author of The Origins of Alliances (1987), which received the 1988 Edgar S. Furniss National Security Book Award. He is also the author of Revolution and War (1996), Taming American Power: The Global Response to U.S. Primacy (2005), and, with co-author J.J. Mearsheimer, The Israel Lobby (2007).

You can read his full bio from herehere and here. For reading his blog on international relation, foreign policy and global affairs please click here.

eTalk’s Niaz Uddin has interviewed Stephen Walt recently to gain insights about his ideas, research and works in the field of Global Development which is given below.

Niaz: Dear Stephen, thank you so much for joining us. We are honored and thrilled to have you at eTalks.

Stephen: My pleasure.

Niaz: You are a realist in an ideological age. You have been a leader in the field of International Affairs. You have done a significant amount of research and added gigantic amount of knowledge in this field.

As you know, by this time, we have developed superb technologies, published millions of great books and developed a lot as human beings. At the beginning of our interview, can you please tell us, how far have we progressed?

Stephen: From one perspective, human progress is remarkable. In the past 500 years, we have identified many of the basic laws of the physical universe, discovered the principles of evolution and genetic inheritance, eliminated many diseases, and lifted millions of people out of poverty.  And along the way humans have created a vast and diverse array of music, literature, and art. Yet these same creative impulses have also been used to create powerful technologies of destruction and various harmful ideologies. Human progress remains a decidedly uneven phenomenon.

Niaz: What are the lacking, scope and opportunity to progress?

Stephen: By developing language, humans became able to record and communicate their discoveries and to work together to create new realities and possibilities. That capacity remains the greatest source of human potential: our collective ability to work together to achieve common ends.

Niaz: Despite all of the progresses we have, why countries keep fighting each other?

Stephen: At the most basic level, conflict between nations arises from a combination of fear, greed, and stupidity. Humans are social beings, and we are hard-wired to establish group identities and loyalties. Once formed, social groups tend to worry about what other groups may do to them, and this basic insecurity drives competition that sometimes leads to war. That’s fear.  States also fight because individual leaders have dreams of glory, or because they seek wealth through conquest and plunder. That’s greed. And finally, wars occur because leaders are fallible; they often misperceive or miscalculate. In particular, they convince themselves that victory will be swift and easy and then discover too late they were mistaken. That’s stupidity. Unfortunately, humankind remains all too prone to all three tendencies.

Niaz: Why do countries fail to build and sustain international relations? Can you please explain us the reasons? 

Stephen: In fact, countries form all sorts of valuable international connections. Global trade and investment has grown steadily, allowing millions to live more comfortably. Previously war-torn regions such as Europe have now known decades of peace. Information now flows all around the world at very low cost. Global institutions like the World Trade Organization or the United Nations have not eliminated global conflict, but they have helped keep international rivalries within bounds.

Yet there are still limits to what global institutions can accomplish. In particular, they cannot keep the most powerful countries from acting as they wish and from competing with each other for advantage. Nor can prevent some individuals and groups from using violence to advance their own political agendas.

Niaz: What do you think about the core problems of building sustainable international relations?

Stephen: I believe the core problem for the next century will be managing the development and rising power of Asia, and grappling with the political and social effects of environmental change. These two challenges will make many of our current concerns seem trivial by comparison.

Niaz: How can countries overcome those challenges?

Stephen: I believe the key to more effective global cooperation lies primarily in encouraging more honest and open global discourse. When countries are guided by myths, self-serving national narratives, and inaccurate information about political and natural phenomena, then clashes and errors are inevitable. By contrast, when humans are able to confront shared problems honestly and openly, they can identify where they disagree and are more likely to develop solutions that work. But it is still a fragile process.

Niaz: Is there any net gain from wars?

Stephen: In some cases, yes. States are sometimes able to improve their position via warfare, or at least can prevent others from gaining an advantage. But “rolling the iron dice of war” is always risky, because no one can be 100 percent sure how things will turn out. For example, it was clear in 2002 that the United States would not have much trouble defeating Saddam Hussein’s army, but the occupation of Iraq quickly turned into a costly quagmire and the final result is far from what the Bush administration intended. Because warfare is always an uncertain enterprise, wise leaders will go to war only when forced to fight.

Niaz: Can you imagine a world without any war? If yes! How can we build that world?

Stephen: I can. For one thing, as my Harvard colleague Steven Pinker has recently shown, the overall level of human violence has been declining fairly steadily for quite some time. Furthermore, I believe nuclear weapons are a powerful deterrent to great power wars, and it is these sorts of wars that cause the greatest human suffering. Lastly, I believe that our species has the capacity to learn, and this capacity can help us avoid some of the circumstances that have fueled war in the past. But none of these measures makes war impossible, which is why we need to remain vigilant against its occurrence.

Niaz: What are the responsibilities of developed countries to restrain them from war?  

Stephen: Because developed countries have the most military capability, they have the responsibility of not using it to oppress others. Sometimes developed countries can use force to deter or halt aggression, which is a good thing. But other times they use their superior power to coerce others, or they wage low-level conflicts that kill innocent people to no good purpose.

Niaz: As a global citizen what are our responsibilities for stop killing each others?

Stephen: I think the first step is for global citizens to try to inform themselves about events, and not to trust just what their own governments and media are telling them. A second step is to develop empathy, by trying to imagine how international problems look to others. We don’t have to agree with those whose interests may be different, but we should try to figure out how they see things, and why.  

Niaz: As you know, there are millions of NGOs and social organizations who work for removing poverty, protecting our environment and so on. But what happens in reality? Business Organizations do the harm. Chinese version of capitalism doesn’t work. Governments are corrupted. And NGOs form for doing good. NGOs keep taking donations from business organizations to survive. Overall, this is a strong circle which continues for hundreds of years. Where do our core problems reside actually?

Stephen: I think we need to be very careful here. There are many NGOs and business organizations who do wonderful work in a number of areas. At the same time, there are other organizations whose activities are actively harmful. What we need most is greater transparency: the more we know about what different organizations are actually doing, and the more we know about who is paying for these activities, the easier it is to judge whether they are a positive or negative force.

Niaz: Do you think we can remover poverty by these poverty removal activities?  Why or Why not?

Stephen: Yes, but the record here is mixed. On the plus side, economic development in countries like China and India have lifted hundreds of millions of people out of poverty, and similar miracles have occurred in a few other places. But on the negative side, the gap between the richest countries and the poorest has actually grown over the past 100 years. When you combine this level of inequality with global communications you have a recipe for trouble, because people in the poorest countries or the poorest sectors can see how the wealthy people are living.

Niaz: What are your ideas to remove poverty and to make life better to contribute in this mother earth for making it a better place?

Stephen: I’m not an expert on economic development, but I think there are several obvious answers here. First, the only way to eliminate poverty is to increase productivity. Second, increasing productivity requires increasing educational levels, and bringing women into the work force in large numbers. It also rests on eliminating barriers to investment and trade, while at the same time creating a legal and regulatory environment that discourages corruption and prevents excessive concentrations of political power in the hands of the wealthy. But none of this is easy or automatic, and when you add it all up, you can see why sustained economic growth is so difficult to achieve.

Niaz: Any last comment?

Stephen: Only this: it is tempting to look for radical solutions, in the belief that some bold stroke will suddenly solve all our problems.   But I think history shows that grand schemes that are supposed to produce some magical solution rarely work, and often cause great misery. Human progress is due to more to patient, steady, trial-and-error efforts, and not from idealistic visions.

Niaz: Dear Stephen thanks again for your invaluable time. We are really enlightened with your ideas, knowledge and experience. We wish you good luck for all of our endeavors. Take very good care of yourself.

Stephen: You are welcome Niaz.

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Further Reading:

1. Peter Klein on Entrepreneurship, Economics and Education

2. Derek Sivers on  Entrepreneurship, CD Baby and Wood Egg

3. F. M. Scherer on Industrial Economy, Digital Economy and Innovation

4. Diego Comin on Entrepreneurship, Technology and Global Economic Development

5. Joseph Nye on Global Politics

6. Juliana Rotich on Social Entrepreneurial Innovation