We present a multi-country theory of economic growth and R&D-driven technological progress in which countries are connected by a network of knowledge exchange. Technological progress in any country depends on the state of technology in the countries it exchanges knowledge with. The diﬀusion of knowledge throughout the world explains a period of increasing world inequality after the take-oﬀ of the forerunners of the industrial revolution, followed by decreasing relative inequality. Knowledge diﬀusion through a Small World network produces an extraordinary diversity of country growth performances, including the overtaking of individual countries and the replacement of the technologically leading country in the course of world development.
# 17-057/II (2017-06-23)
- Ines Lindner, VU Amsterdam and Tinbergen Institute, The Netherlands; Holger Strulik, University of Goettingen, Germany
- networks, knowledge diffusion, economic growth, world income distribution
- JEL codes:
- O10, O40, D85, F43