Total factor productivity and technological congruence in Italy, 1861-2010

In the catch-up literature, more attention has been paid to the rate rather than the direction of technological change. This paper presents and implements a novel methodology to identify and measure the effects of the direction of technological change in terms of technological congruence and its effects on total factor productivity (TFP). Evolution of the match between technology direction and the idiosyncrasies of its endowments and factor markets is a key factor in country growth. We elaborate its implications for the theory of induced technological change, and apply it to an empirical analysis of Italy’s economic history from 1861 to 2010. The results confirm the important role of the introduction of biased technological change in the assessment of the levels of technological congruence and TFP, and for supporting the long-run convergence of an early-late-comer.