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How Trade Patterns and Technology Flows Affect Productivity Growth

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  • Wolfgang Keller

Abstract

This paper examines the evidence on technology diffusion through trade in differentiated intermediate goods. Because intermediates are invented through costly research and development (R&D) investments, employing imported intermediates implies an implicit sharing of the technology that was created in other countries. The model predicts that the import patterns of countries matters for productivity, because a country that imports primarily from technological leaders receives more technology embodied in intermediate goods than another that imports primarily from follower countries. I try to quantify the importance of trade patterns in determining technology flows that affect productivity by using industry level data for machinery goods imports and productivity in eight OECD countries between 1970-91. First evidence that these countries benefit more from domestic R&D than from R&D of the average foreign country. Second, conditional on technology diffusion from domestic R&D composition of a country matters, but only if it is strongly biased towards or away from technological leaders. Third, I estimate that differences in technology inflows related to the countries' patterns of imports explain about 20% of the total variation in the countries' productivity growth. The implications of these findings for developing countries are discussed.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 6990.

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Date of creation: Mar 1999
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Publication status: published as Wolfgang Keller. "Do Trade Patterns and Technology Flows Affect Productivity Growth?" World Bank Economic Review, Jan 2000; 14: 17 - 47.
Handle: RePEc:nbr:nberwo:6990

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  1. 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.
  2. 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.
  3. M. Ishaq Nadiri, 1993. "Innovations and Technological Spillovers," NBER Working Papers 4423, National Bureau of Economic Research, Inc.
  4. Coe, David T. & Helpman, Elhanan, 1995. "International R&D spillovers," European Economic Review, Elsevier, vol. 39(5), pages 859-887, May.
  5. Philippe Aghion & Peter Howitt, 1990. "A Model of Growth Through Creative Destruction," NBER Working Papers 3223, National Bureau of Economic Research, Inc.
  6. Rivera-Batiz, Luis A & Romer, Paul M, 1991. "Economic Integration and Endogenous Growth," The Quarterly Journal of Economics, MIT Press, vol. 106(2), pages 531-55, May.
  7. Wolfgang Keller, 1997. "Are International R&D Spillovers Trade-Related? Analyzing Spillovers Among Randomly Matched Trade Partners," NBER Working Papers 6065, National Bureau of Economic Research, Inc.
  8. 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.
  9. Aghion, Philippe & Howitt, Peter, 1992. "A Model of Growth Through Creative Destruction," Scholarly Articles 12490578, Harvard University Department of Economics.
  10. Jeffrey I. Bernstein & Pierre Mohnen, 1994. "International R & D Spillovers between U.S. and Japanese R & D intensive sectors," Cahiers de recherche du Département des sciences économiques, UQAM 9406, Université du Québec à Montréal, Département des sciences économiques.
  11. Frank Lichtenberg & Bruno van Pottelsberghe de la Potterie, 1996. "International R&D Spillovers: A Re-Examination," NBER Working Papers 5668, National Bureau of Economic Research, Inc.
  12. Luis A. Rivera-Batiz & Paul M. Romer, 1991. "International Trade with Endogenous Technological Change," NBER Working Papers 3594, National Bureau of Economic Research, Inc.
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