The concept of technological gap refers to a situation where the production processes used by one country are technically “superior” (and therefore, more “cost-effective”, or less expensive) than the ones used by the others.
Normally, a country having a scientific temperament and backed by a long and established tradition of research and development is in a better position to adopt technological innovations, produce existing goods at a lower cost and introduce new products as well. Such a country is in a position to have a comparative cost advantage over its trade partners in several groups of commodities.
In early twentieth century, Joseph Schumpeter introduced the concepts of “entrepreneurs” and “imitators”. The “entrepreneurs” are those who take the risk of adopting-innovations”, that is, producing existing goods with newer technological processes and/or inputs and introducing “new products”.
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They are thus the risk takers and leaders. Those entrepreneurs whose ventures succeed reap profit incomes. However, their success attracts imitators who copy them.
The innovations introduced by the entrepreneurs are adopted on a large scale; supplies improve, product prices decline, and the profits of entrepreneurs are wiped out. The economy, however, reaches a higher level of production and development. This is followed by another wave of innovations.
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Schumpeter’s line of reasoning can be extended to the field of international trade, where some economies perform the role of entrepreneurs and others that of imitators.
Economies of different countries do not operate at same level of technology and on this basis, they can be broadly grouped in several categories.
In other words, there are “technological gaps” between them. It is also well recognised that within each broader group of countries with a comparable technological level, differences exist at the level of individual products and sub-products.