Leapfrogging in international competition: A theory of cycles in national technological leadership

Endogenous-growth theory suggests that technological change tends to reinforce the position of the leading nations. Yet sometimes this leadership role shifts. We suggest a mechanism that explains this pattern of "leapfrogging" as a response to occasional major changes in technology. When such a change occurs, the new technology does not initially seem to be an improvement for leading nations, given their extensive experience with older technologies. Lagging nations have less experience; the new technique allows them to use their lower wages to enter the market. If the new technique proves more productive than the old, leapfrogging of leadership occurs. (JEL F12, F43).