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Knowledge Spillovers at the World's Technology Frontier

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  • Keller, Wolfgang

Abstract

Convergence in per capita income turns on whether technological knowledge spillovers are global or local. Global spillovers favour convergence, while a geographically limited scope of knowledge diffusion can lead to regional clusters of countries with persistently different levels of income per capita. This Paper estimates the importance of geographic distance for technology diffusion, how this has changed over time, and whether international trade, foreign direct investment, and communication flows serve as important channels of diffusion. The analysis is based on examining the productivity effects of R&D expenditures in the world's seven major industrialized countries between 1970 and 1995. First, I find that the scope of technology diffusion is severely limited by distance: the geographic half-life of technology, the distance at which half of the technology has disappeared, is estimated to be only 1,200 kilometres. Second, technological knowledge has become much more global from the early 1970s to the 1990s. Third, I estimate that trade patterns account for the majority of all differences in bilateral technology diffusion, whereas foreign direct investment and language skills differences contribute circa 15% each. Lastly, these three channels together account for almost the entire localization effect that would otherwise be attributed to geographic distance.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 2815.

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Date of creation: May 2001
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Handle: RePEc:cpr:ceprdp:2815

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Keywords: Agglomeration; Communication; Convergence; Divergence; Economic Geography; FDI; Growth; International Trade; Language Skills; R&D; Technology Diffusion; Total Factor Productivity;

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References

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Citations

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Cited by:
  1. Quamrul Ashraf & Oded Galor, 2008. "Human Genetic Diversity and Comparative Economic Development," 2008 Meeting Papers 617, Society for Economic Dynamics.
  2. Jim Rose & Wayne Stevens, 2004. "Global Connectedness and Bilateral Economic Linkages - Which Countries?," Treasury Working Paper Series 04/09, New Zealand Treasury.
  3. Nocco, Antonella, 2005. "The rise and fall of regional inequalities with technological differences and knowledge spillovers," Regional Science and Urban Economics, Elsevier, vol. 35(5), pages 542-569, September.
  4. Li, Ben, 2010. "Multinational production and choice of technologies: New evidence on skill-biased technological change from China," Economics Letters, Elsevier, vol. 108(2), pages 181-183, August.
  5. Döring, Thomas & Schnellenbach, Jan, 2004. "What Do We Know About Geographical Knowledge Spillovers and Regional Growth? A Survey of the Literature," Research Notes 14, Deutsche Bank Research.
  6. Yasar, Mahmut & Morrison Paul, Catherine J., 2008. "Foreign Technology Transfer and Productivity: Evidence From a Matched Sample," Journal of Business & Economic Statistics, American Statistical Association, vol. 26, pages 105-112, January.
  7. Wolfgang Keller & Stephen R. Yeaple, 2005. "Multinational Enterprises, International Trade, and Productivity Growth: Firm-Level Evidence from the United States," Kiel Working Papers 1249, Kiel Institute for the World Economy.
  8. Juergen Antony, 2005. "Diffusion of Scale Effects between European Regions," Discussion Paper Series 281, Universitaet Augsburg, Institute for Economics.
  9. Keller, Wolfgang & Yeaple, Stephen R, 2003. "Multinational Enterprises, International Trade and Productivity Growth: Firm-Level Evidence from the US," CEPR Discussion Papers 3805, C.E.P.R. Discussion Papers.
  10. Abdulai, Awudu & Diao, Xinshen & Johnson, Michael, 2005. "Achieving regional growth dynamics in African agriculture," DSGD discussion papers 17, International Food Policy Research Institute (IFPRI).
  11. Juergen Antony, 2005. "Scale Externalities of the G7 Countries," Discussion Paper Series 280, Universitaet Augsburg, Institute for Economics.

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