There is an influential literature studying the impact on total factor productivity (TFP) of foreign technology obtained through imports (trade). This paper builds on that literature and is a first attempt to examine the effects on TFP in the South of technology developed in the North that is diffused not only through international trade, but also through foreign direct investment (FDI) and international telecommunications (ITC) measured in call traffic. For developing countries in the South, we construct trade-related, FDI-related and ITC-related North foreign R&D indices, using country specific R&D stocks in the North, and respectively with North-South bilateral trade patterns, FDI patterns and ITC volumes. We find: (i) trade and ITC both significantly promote North- South technology diffusion, while FDI seems to generate North-South technology diffusion, though not always significantly; (ii) the effects on TFP through ITC-related foreign R&D are the largest, followed in order by those through trade-related, and then by those through FDI-related foreign R&D indices; and (iii) the effects on TFP of traderelated North foreign R&D are primarily driven by the growth in developing countries’ trade-to-GDP ratios, while the effects from ITC-related North foreign R&D are largely due to the growth in the Northern R&D stocks.
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Paper provided by Carleton University, Department of Economics in its series Carleton Economic Papers with number
06-01.
References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
David Dollar & Aart Kraay, 2004.
"Trade, Growth, and Poverty,"
Economic Journal,
Royal Economic Society, vol. 114(493), pages F22-F49, 02.
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