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Trade and Transmission of Technology

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  • Wolfgang Keller

Abstract

We present a model of R&D-driven growth which predicts that technology, in the form of product designs and created through R&D investments, is transmitted to other domestic and foreign sectors by being embodied in differentiated intermediate goods. Empirical results are presented employing data from thirteen manufacturing industries in eight OECD countries over the period of 1970 to 1991. We confirm, first, earlier findings that R&D expenditures are positively related to productivity levels, and estimate an elasticity of TFP with respect to own-industry R&D between 7% and 17%. Second, the receiving industry benefits also from other industries' technology investments, an effect which is at least in part due to trade in embodied technology. We find that the benefit derived from foreign R&D in the same industry is in the order of 50%-95% of the productivity effect of own R&D. Third, for domestic interindustry technology flows, the results strongly suggest that trade in goods is not all that matters for technology transmission. We estimate that domestic, outside-industry R&D is one-fifth to one-half as effective in raising" productivity as own-industry R&D for these industries.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 6113.

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Date of creation: Jul 1997
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Publication status: published as Keller, Wolfgang. "Trade And The Transmission Of Technology," Journal of Economic Growth, 2002, v7(1,Mar), 5-24.
Handle: RePEc:nbr:nberwo:6113

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  1. Griliches, Zvi, 1992. " The Search for R&D Spillovers," Scandinavian Journal of Economics, Wiley Blackwell, vol. 94(0), pages S29-47, Supplemen.
  2. David T. Coe & Elhanan Helpman, 1993. "International R&D Spillovers," NBER Working Papers 4444, National Bureau of Economic Research, Inc.
  3. Rodrik, Rani, 1995. "Trade and industrial policy reform," Handbook of Development Economics, in: Hollis Chenery & T.N. Srinivasan (ed.), Handbook of Development Economics, edition 1, volume 3, chapter 45, pages 2925-2982 Elsevier.
  4. Ethier, Wilfred J, 1982. "National and International Returns to Scale in the Modern Theory of International Trade," American Economic Review, American Economic Association, vol. 72(3), pages 389-405, June.
  5. Keller, Wolfgang, 1996. "Absorptive capacity: On the creation and acquisition of technology in development," Journal of Development Economics, Elsevier, vol. 49(1), pages 199-227, April.
  6. Luis A. Rivera-Batiz & Paul M. Romer, 1990. "Economic Integration and Endogenous Growth," NBER Working Papers 3528, National Bureau of Economic Research, Inc.
  7. M. Ishaq Nadiri, 1993. "Innovations and Technological Spillovers," NBER Working Papers 4423, National Bureau of Economic Research, Inc.
  8. Zvi Griliches, 1998. "R&D and Productivity Growth at the Industry Level: Is There Still a Relationship?," NBER Chapters, in: R&D and Productivity: The Econometric Evidence, pages 213-240 National Bureau of Economic Research, Inc.
  9. Paul Romer, 1989. "Endogenous Technological Change," NBER Working Papers 3210, National Bureau of Economic Research, Inc.
  10. Wolff, Edward N. & Ishaq Nadiri, M., 1993. "Spillover effects, linkage structure, and research and development," Structural Change and Economic Dynamics, Elsevier, vol. 4(2), pages 315-331, December.
  11. Park, Walter G, 1995. "International R&D Spillovers and OECD Economic Growth," Economic Inquiry, Western Economic Association International, vol. 33(4), pages 571-91, October.
  12. Frederic Scherer, 1984. "Using Linked Patent and R&D Data to Measure InterindustryTechnology Flows," NBER Chapters, in: R & D, Patents, and Productivity, pages 417-464 National Bureau of Economic Research, Inc.
  13. Griliches, Zvi & Lichtenberg, Frank, 1984. "Interindustry Technology Flows and Productivity Growth: A Re-examination," The Review of Economics and Statistics, MIT Press, vol. 66(2), pages 324-29, May.
  14. Samuel Kortum & Jonathan Putnam, 1997. "Assigning Patents to Industries: Tests of the Yale Technology Concordance," Economic Systems Research, Taylor & Francis Journals, vol. 9(2), pages 161-176.
  15. Ariel Pakes & Mark Schankerman, 1979. "The Rate of Obsolescence Of Knowledge, Research Gestation Lags, and the Private Rate of Return to Research Resources," NBER Working Papers 0346, National Bureau of Economic Research, Inc.
  16. Coe, David T & Helpman, Elhanan & Hoffmaister, Alexander W, 1997. "North-South R&D Spillovers," Economic Journal, Royal Economic Society, vol. 107(440), pages 134-49, January.
  17. Jonathan Eaton & Samuel Kortum, 1995. "Patenting and Productivity in the OECD," Boston University - Institute for Economic Development 51, Boston University, Institute for Economic Development.
  18. Robert E. Hall, 1989. "Invariance Properties of Solow's Productivity Residual," NBER Working Papers 3034, National Bureau of Economic Research, Inc.
  19. M. Ishaq Nadiri & Ingmar R. Prucha, 1993. "Estimation of the Depreciation Rate of Physical and R&D Capital in the U.S. Total Manufacturing Sector," NBER Working Papers 4591, National Bureau of Economic Research, Inc.
  20. Daniel Johnson & Robert Evenson, 1997. "Innovation and Invention in Canada," Economic Systems Research, Taylor & Francis Journals, vol. 9(2), pages 177-192.
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