Governments can play a critical role in supporting technological progress. In fact, countries that have achieved sustained and quick technological progress have usually had the benefit of committed national leadership.

The World Bank’s Global Economic Prospects 2008: Technology Diffusion in the Developing World  does not provide a detailed roadmap for promoting technological progress, but indicates a set of broad policy directions:

• Maintain openness to trade, foreign direct investment, and participation of migrant populations. This is seen as critical for both low-income and middle income countries, where technological progress usually happens through the adoption and adaptation of pre-existing technologies that are new to the domestic market or to domestic firms.
  

• Further improve the investment climate so as to allow innovative firms to grow and flourish. Firms and entrepreneurs are the foremost channel through which technology is disseminated in market economies; they need to be able to undertake and expand new activities. This requires a stable macroeconomic environment, as well as effective enforcement of property rights and the rule of law. Firms need to be free of excessive restrictions on hiring and terminating employees, and should not have excessive regulatory or financial burdens. 
  

• Improve basic infrastructure (roads, electricity, telephony). When these older technologies have not penetrated a country deeply enough, the spread of other technologies may also be restricted. Ensuring the wide and reliable provision of these enabling technologies should be a policy priority – whether the actual delivery is performed by the private or public sectors.
  

• Raise the quality and quantity of education throughout the economy—not just in major centers. Firms will not be able to exploit new technologies unless their workers and consumers have basic technological literacy. Governments need to deliver good quality education to as many people as possible, by maximizing both enrollment rates but also the quality of education delivered. Efforts should extend beyond the formal education system and include efforts aimed at providing the adult population with basic technological literacy, including vocational skills such as those needed to improve water and sanitation services for example.
  

• Emphasize technology diffusion by reinforcing dissemination systems and the market-orientation of R&D programs. While research centers cannot be created everywhere, absorptive capacity needs due attention. Dissemination channels such as domestic transportation should be improved. Applied R&D agencies need to focus on outreach, testing, marketing, commercialization and dissemination activities.
  
  

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