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Knowledge Diffusion and Trade across Countries and Sectors

Author

Listed:
  • Nan Li

    (International Monetary Fund)

  • Jie Cai

    (Shanghai University of Finance and Economics)

  • Ana Maria Santacreu

    (St. Louis Fed)

Abstract

Countries and sectors interact through knowledge spillovers and international trade flows. These interactions drive differences in income per capita and innovation not only across countries, but also across sectors within a country. We develop and quantify a model of innovation, knowledge diffusion and trade that can explain these differences. Using data on intersectoral patent citations, R&D expenditures and international trade flows, we calibrate the model and perform several counterfactual exercises. Decreases in trade costs or increases in the speed of diffusion reallocate resources across countries and sectors, generating a distributional effect on aggregate innovation and growth.

Suggested Citation

  • Nan Li & Jie Cai & Ana Maria Santacreu, 2017. "Knowledge Diffusion and Trade across Countries and Sectors," 2017 Meeting Papers 692, Society for Economic Dynamics.
    • Handle: RePEc:red:sed017:692
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    References listed on IDEAS

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    2. Grüning, Patrick, 2018. "Heterogeneity in the internationalization of R&D: Implications for anomalies in finance and macroeconomics," Finance Research Letters, Elsevier, vol. 26(C), pages 132-138.
    3. Góes, Carlos & Bekkers, Eddy, 2022. "The impact of geopolitical conflicts on trade, growth, and innovation," WTO Staff Working Papers ERSD-2022-9, World Trade Organization (WTO), Economic Research and Statistics Division.
    4. Gang Chen & Xue Dong & Patrick Minford & Guanhua Qiu & Yongdeng Xu & Zequn Xu, 2022. "Computable General Equilibrium Models of Trade in the Modern Trade Policy Debate," Open Economies Review, Springer, vol. 33(2), pages 271-309, April.
    5. Ana Maria Santacreu & Liliana Varela, 2018. "Innovation and the Patterns of Trade: A Firm-Level Analysis," 2018 Meeting Papers 303, Society for Economic Dynamics.
    6. Julián D. Gómez, 2018. "¿Qué determina la adopción de tecnologías para la generación de energías renovables entre países?," Documentos CEDE 17132, Universidad de los Andes, Facultad de Economía, CEDE.
    7. Goes, Carlos & Bekkers, Eddy, 2020. "The Impact of Trade Conflicts on Innovation," Conference papers 333243, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    8. Hötte, Kerstin, 2023. "Demand-pull, technology-push, and the direction of technological change," Research Policy, Elsevier, vol. 52(5).
    9. Hirschbühl, Dominik & Spitzer, Martin, 2021. "International medium-term business cycles," Working Paper Series 2536, European Central Bank.
    10. Minford, Patrick & Xu, Yongdeng & Dong, Xue, 2023. "Testing competing world trade models against the facts of world trade," Journal of International Money and Finance, Elsevier, vol. 138(C).

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