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North-South Technology Diffusion, Regional Integration, and the Dynamics of the “Natural Trading Partners” Hypothesis

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  • Schiff, Maurice

    ()
    (World Bank)

  • Wang, Yanling

    ()
    (Carleton University)

Abstract

Based on static analysis, a number of studies argue that forming a RTA is more likely to raise welfare if member countries are “natural trading partners,” while other studies claim the opposite. This paper considers the argument from a dynamic viewpoint by examining the impact of trade with Japan, North America and the EU on technology diffusion and TFP in Korea, Mexico and Poland. Using industry-level data, we show that i) technology diffusion and productivity gains tend to be regional: Korea (Mexico) (Poland) benefits mainly from trade with Japan (North America) (the EU); and ii) the dynamic version of the “natural trading partners” hypothesis seems to hold for Korea and Mexico though not necessarily for Poland.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 1384.

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Length: 24 pages
Date of creation: Nov 2004
Date of revision:
Publication status: published in: Revue d'économie du développement, 2007, 21 (5), 69-84
Handle: RePEc:iza:izadps:dp1384

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Related research

Keywords: Mexico; Poland; Korea; North-South technology diffusion; natural trading partners; productivity; regional integration;

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References

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  1. Elhanan Helpman & David T. Coe, 1993. "International RandD Spillovers," IMF Working Papers 93/84, International Monetary Fund.
  2. Michaely, Michael, 1998. "Partners to a preferential trade agreement: Implications of varying size," Journal of International Economics, Elsevier, vol. 46(1), pages 73-85, October.
  3. Coe, David T. & Helpman, Elhanan, 1995. "International R&D spillovers," European Economic Review, Elsevier, vol. 39(5), pages 859-887, May.
  4. Keller, W., 1996. "Are International R&D Spillovers Trade-Related? Analyzing Spillovers Among Randomly Matched Trade Partners," Working papers 9607, Wisconsin Madison - Social Systems.
  5. 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.
  6. Lawrence H. Summers, 1991. "Regionalism and the world trading system," Proceedings - Economic Policy Symposium - Jackson Hole, Federal Reserve Bank of Kansas City, pages 295-301.
  7. Lumenga-Neso, Olivier & Olarreaga, Marcelo & Schiff, Maurice, 2001. "On 'Indirect' Trade-Related R&D Spillovers," CEPR Discussion Papers 2871, C.E.P.R. Discussion Papers.
  8. Lichtenberg, Frank R. & Pottelsberghe de la Potterie, Bruno v., 1998. "International R&D spillovers: A comment," European Economic Review, Elsevier, vol. 42(8), pages 1483-1491, September.
  9. Schiff, Maurice, 1999. "Will the real"natural trading partner"please stand up?," Policy Research Working Paper Series 2161, The World Bank.
  10. Panagariya, A., 1997. "Preferential trading and the myth of natural trading partners," Japan and the World Economy, Elsevier, vol. 9(4), pages 471-489, December.
  11. Schiff, Maurice & Wang, Yanling & Olarreaga, Marcelo, 2002. "Trade-related technology diffusion and the dynamics of North-South and South-South integration," Policy Research Working Paper Series 2861, The World Bank.
  12. Pravin Krishna, 2003. "Are Regional Trading Partners "Natural"?," Journal of Political Economy, University of Chicago Press, vol. 111(1), pages 202-231, February.
  13. David T. Coe & Alexander W. Hoffmaister, 1999. "Are there International RandD Spillovers Among Randomly Matched Trade Partners? A Response to Keller," IMF Working Papers 99/18, International Monetary Fund.
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Cited by:
  1. Behar, Alberto & Criville, Laia Cirera i, 2011. "Does it matter who you sign with ? comparing the impacts of north-south and south-south trade agreements on bilateral trade," Policy Research Working Paper Series 5626, The World Bank.

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