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The dual nature of trade: measuring its impact on imitation and growth

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  • Michelle P. Connolly
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    Abstract

    Imports of goods that embody foreign technology raise a country's output directly as inputs into production and indirectly through reverse-engineering of these goods, which contributes to domestic imitation and innovation. This paper first quantifies spillovers from high-technology imports from developed countries to domestic imitation and innovation in both developed and developing countries. It then considers the contribution of foreign and domestic innovation to real per capita GDP growth. ; International patent data for forty countries from 1970 to 1985 are used to create proxies for imitation and innovation. High-technology imports, as well as quality-adjusted research and the size of the economy, positively affect both domestic imitation and innovation. Transportation and communication infrastructure positively affects imitation, but does not appear to play a role in innovation. Interestingly, foreign direct investment, often considered an important mechanism for technological diffusion to developing nations, does not significantly affect either domestic innovation or imitation. Finally, while both foreign and domestic innovation contribute positively to real per capita GDP growth, foreign technology from developed countries appears to play a far greater role in growth than domestic technology.

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    Bibliographic Info

    Paper provided by Federal Reserve Bank of New York in its series Staff Reports with number 44.

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    Date of creation: 1998
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    Handle: RePEc:fip:fednsr:44

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    Keywords: Imports ; Technology;

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    Cited by:
    1. Wolfgang Keller, 2004. "International Technology Diffusion," Journal of Economic Literature, American Economic Association, vol. 42(3), pages 752-782, September.
    2. Schneider, Patricia Higino, 2005. "International trade, economic growth and intellectual property rights: A panel data study of developed and developing countries," Journal of Development Economics, Elsevier, vol. 78(2), pages 529-547, December.
    3. Bos, J.W.B. & Economidou, C. & Koetter, M. & Kolari, J.W., 2010. "Do all countries grow alike?," Journal of Development Economics, Elsevier, vol. 91(1), pages 113-127, January.
    4. N. Apergis & C. Economidou & I. Filippidis, 2008. "Innovation, Technology Transfer and Labor Productivity Linkages: Evidence from a Panel of Manufacturing Industries," Working Papers 08-29, Utrecht School of Economics.
    5. Gong, Guan & Keller, Wolfgang, 2003. "Convergence and polarization in global income levels: a review of recent results on the role of international technology diffusion," Research Policy, Elsevier, vol. 32(6), pages 1055-1079, June.
    6. Roe, Terry L. & Mohtadi, Hamid, 1999. "International Trade And Growth: An Overview From The Perspective Of The New Growth Theory," 1999 Annual meeting, August 8-11, Nashville, TN 21536, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).

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