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Technology and Bilateral Trade

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Author Info
Jonathan Eaton
Samuel Kortum

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Abstract

We develop a Ricardian model to explore the role of trade in spreading hte benefits of innovation. The theory delivers an equation for bilateral trade that, on its surface, resembles a gravity specification, but identifies underlying parameters of technology. We estimate the equation using trade in manufactures among the OECD. The parameter estimates allow us to simulate the model to investigate the role of trade in spreading the benefits of innovation and to examine the effects of lower trade barriers. Typically foreigners benefit by only a tenth as much as the innovating country, but in some cases the benefits to close neighbors approach those of the innovator.

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Publisher Info
Paper provided by Boston University, Institute for Economic Development in its series Boston University - Institute for Economic Development with number 79.

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Date of creation: Sep 1997
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Handle: RePEc:fth:bosecd:79

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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.:
  1. Samuel S. Kortum, 1997. "Research, Patenting, and Technological Change," Econometrica, Econometric Society, vol. 65(6), pages 1389-1420, November.
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  4. Jonathan Eaton & Samuel Kortum, 1996. "A Rising Tide Raises All Ships: Trade and Diffusion as Conduits of Growth," Boston University - Institute for Economic Development 82, Boston University, Institute for Economic Development.
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  6. Bernard, Andrew B. & Bradford Jensen, J., 1999. "Exceptional exporter performance: cause, effect, or both?," Journal of International Economics, Elsevier, vol. 47(1), pages 1-25, February. [Downloadable!] (restricted)
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  7. Robert J. Barro & Jong-Wha Lee, 1993. "International Comparisons of Educational Attainment," NBER Working Papers 4349, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  8. Zvi Griliches, 1992. "The Search for R&D Spillovers," NBER Working Papers 3768, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  9. Deardorff, Alan V., 1984. "Testing trade theories and predicting trade flows," Handbook of International Economics, in: R. W. Jones & P. B. Kenen (ed.), Handbook of International Economics, edition 1, volume 1, chapter 10, pages 467-517 Elsevier. [Downloadable!] (restricted)
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  11. Bergstrand, Jeffrey H, 1989. "The Generalized Gravity Equation, Monopolistic Competition, and the Factor-Proportions Theory in International Trade," The Review of Economics and Statistics, MIT Press, vol. 71(1), pages 143-53, February. [Downloadable!] (restricted)
  12. Eaton, Jonathan & Kortum, Samuel, 1999. "International Technology Diffusion: Theory and Measurement," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 40(3), pages 537-70, August.
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  17. Jonathan Eaton & Akiko Tamura, 1995. "Bilateralism and Regionalism in Japanese and U.S. Trade and Direct Foreign Investment Patterns," NBER Working Papers 4758, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  18. Small, Kenneth A, 1987. "A Discrete Choice Model for Ordered Alternatives," Econometrica, Econometric Society, vol. 55(2), pages 409-24, March. [Downloadable!] (restricted)
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  20. David Hummels & James Levinsohn, 1993. "Monopolistic Competition and International Trade: Reconsidering the Evidence," NBER Working Papers 4389, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  21. repec:fth:michin:382 is not listed on IDEAS
  22. Alan V. Deardorff, 1995. "Determinants of Bilateral Trade: Does Gravity Work in a Neoclassical World?," NBER Working Papers 5377, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  23. Haveman, J. & Hummels, D., 1997. "What Can We Learn from Bilateral Trade? Gravity and Beyond," Papers 97-002, Purdue University, Krannert School of Management - Center for International Business Education and Research (CIBER).
  24. Baxter, Marianne, 1992. "Fiscal Policy, Specialization, and Trade in the Two-Sector Model: The Return of Ricardo?," Journal of Political Economy, University of Chicago Press, vol. 100(4), pages 713-44, August. [Downloadable!] (restricted)
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  25. James Harrigan, 1996. "Technology, Factor Supplies and International Specialization: Estimating the Neoclassical Model," NBER Working Papers 5722, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  26. Anderson, James E, 1979. "A Theoretical Foundation for the Gravity Equation," American Economic Review, American Economic Association, vol. 69(1), pages 106-16, March. [Downloadable!] (restricted)
  27. Edward E. Leamer & James Levinsohn, 1994. "International Trade Theory: The Evidence," NBER Working Papers 4940, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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Full references

Cited by:
(explanations, 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.)

  1. Márquez Ramos, Laura & Martínez Zarzoso, Inmaculada & Sanjuan Lucas, Elena & Suárez Burguet, Celestino, 2007. "Efecto De Las TIC Sobre El Comercio Y El Desarrollo Económico. Análisis Para El Caso De España/Effect of ICT on Trade and Economic Development. An Application to the Spanish Case," Estudios de Economía Aplicada, Estudios de Economía Aplicada, vol. 25, pages 313-340, Abril. [Downloadable!] (restricted)
  2. Elhanan Helpman, 1999. "The Structure of Foreign Trade," Journal of Economic Perspectives, American Economic Association, vol. 13(2), pages 121-144, Spring. [Downloadable!] (restricted)
    Other versions:
  3. Jun Ishii & Kei-Mu Yi, 1997. "The growth of world trade," Research Paper 9718, Federal Reserve Bank of New York. [Downloadable!]
  4. Catherine Y. Co & Patricia Euzent & Thomas Martin, 2004. "The export effect of immigration into the USA," Applied Economics, Taylor and Francis Journals, vol. 36(6), pages 573-583, April. [Downloadable!] (restricted)
  5. Braconier, Henrik & Ekholm, Karolina & Midelfart Knarvik, Karen Helene, 2001. "Does FDI Work as a Channel for R&D Spillovers? Evidence Based on Swedish Data," Working Paper Series 553, Research Institute of Industrial Economics. [Downloadable!]
    Other versions:
  6. Redding, Stephen J & Venables, Anthony J., 2003. "Geography and Export Performance: External Market Access and Internal Supply Capacity," CEPR Discussion Papers 3807, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  7. Helene Erkel-Rousse & Daniel Mirza, 2000. "Import Price-Elastcities: Reconsidering the Evidence," Econometric Society World Congress 2000 Contributed Papers 0909, Econometric Society. [Downloadable!]
    Other versions:
  8. Cassiman, Bruno & Veugelers, Reinhilde, 1999. "Importance of International Linkages for Local Know-How Flows: Some Econometric Evidence From Belgium," CEPR Discussion Papers 2337, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  9. Márquez-Ramos, Laura & Martínez-Zarzoso, Inmaculada, 2009. "The effect of technological innovation on international trade : a nonlinear approach," Economics Discussion Papers 2009-24, Kiel Institute for the World Economy. [Downloadable!]
  10. Catin, Maurice & Luo, Xubei & Van Huffel, Christophe, 2005. "Openness, industrialization, and geographic concentration of activities in China," Policy Research Working Paper Series 3706, The World Bank. [Downloadable!]
  11. Carmela Martin & Francisco J. Velazquez, 2000. "Determinants of net trade flows in the OECD: new evidende with special emphasis on the case of the former communist members," European Economy Group Working Papers 4, European Economy Group. [Downloadable!]
  12. Carlos Carrillo & Carmen A. Li, 2002. "Trade Blocks and the Gravity Model: Evidence from Latin American Countries," Economics Discussion Papers 542, University of Essex, Department of Economics. [Downloadable!]
  13. Inmaculada Martínez Zarzoso & Laura Márquez Ramos, 2005. "International Trade, Technological Innovation And Income: A Gravity Model Approach," Working Papers. Serie EC 2005-15, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie). [Downloadable!]
  14. Roland Rieder, 2006. "Playing Dominoes in Europe: An Empirical Analysis of the Domino Theory for the EU, 1962-2004," HEI Working Papers 11-2006, Economics Section, The Graduate Institute of International Studies, revised Jun 2006. [Downloadable!]
  15. Keith Head & Thierry Mayer, 2000. "Non-Europe: The magnitude and causes of market fragmentation in the EU," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 136(2), pages 284-314, June. [Downloadable!] (restricted)
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  16. Vêlayoudom Marimoutou & Denis Peguin & Anne Peguin-Feissolle, 2009. "The "distance-varying" gravity model in international economics: is the distance an obstacle to trade?," Post-Print hal-00389570_v1, HAL. [Downloadable!]
  17. Simon J. Evenett & Wolfgang Keller, 1998. "On Theories Explaining the Success of the Gravity Equation," NBER Working Papers 6529, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  18. Marius Brülhart & Mary J. Kelly, 1999. "Ireland’s Trading Potential with Central and Eastern European Countries - A Gravity Study," The Economic and Social Review, Economic and Social Studies, vol. 30(2), pages 159-174. [Downloadable!]
    Other versions:
  19. Cardamone, Paola, 2007. "A survey of the assessments of the effectiveness of Preferential Trade Agreements using gravity models," Working Papers 7282, TRADEAG - Agricultural Trade Agreements. [Downloadable!]
    Other versions:
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