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Trade Patterns, Technology Flows, and Productivity Growth

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  • Wolfgang Keller

    (University of Wisconsin-Madison)

Abstract

This paper presents a model of international trade in differentiated intermediate goods. Because intermediates are invented through costly R&D investments, employing foreign intermediates implies sharing the return to R&D with the inventor country. I first derive a relation of how domestic productivity is related to foreign R&D investments. In the subsequent empirical analysis, industry level data for eight OECD countries between 1970-91 is used to estimate that relation. The robustness of interpreting empirical findings is emphasized, to which effect I employ Monte-Carlo techniques, and the part of international R&D spillovers that is related to trade is quantified. I find evidence, first, that domestic and foreign R&D affect productivity differently, in contrast to assuming symmetric effects. Second, the productivity effects resulting from R&D vary substantially by which country conducts the R&D. Third, I find that the composition of a country's import partners does not significantly affect the estimated effect from foreign R&D, indicating a large component in the benefit from foreign R&D which is not related to trade. Lastly, I estimate that international trade contributes about 20% to the total productivity effect from foreign R&D.

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Bibliographic Info

Paper provided by EconWPA in its series International Trade with number 9702001.

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Length: 18 pages
Date of creation: 25 Feb 1997
Date of revision:
Handle: RePEc:wpa:wuwpit:9702001

Note: Type of Document - Tex; prepared on IBM PC - PC-TEX; to print on HP and PostScript; pages: 18; figures: request from author
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Web page: http://128.118.178.162

Related research

Keywords: International R&D Spillovers; Intermediate Goods Trade; Embodied Technological Change Monte-Carlo Estimation;

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References

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  1. repec:att:wimass:9620 is not listed on IDEAS
  2. 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.
  3. Aghion, P. & Howitt, P., 1990. "A Model Of Growth Through Creative Destruction," DELTA Working Papers 90-12, DELTA (Ecole normale supérieure).
  4. Coe, D.T. & Helpman, E., 1993. "International R&D Spillovers," Papers 5-93, Tel Aviv.
  5. Keller, Wolfgang, 1998. "Are international R&D spillovers trade-related?: Analyzing spillovers among randomly matched trade partners," European Economic Review, Elsevier, vol. 42(8), pages 1469-1481, September.
  6. 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.
  7. Keller, Wolfgang, 2002. " Trade and the Transmission of Technology," Journal of Economic Growth, Springer, vol. 7(1), pages 5-24, March.
  8. Rivera-Batiz, Luis A. & Romer, Paul M., 1991. "International trade with endogenous technological change," European Economic Review, Elsevier, vol. 35(4), pages 971-1001, May.
  9. Luis A. Rivera-Batiz & Paul M. Romer, 1990. "Economic Integration and Endogenous Growth," NBER Working Papers 3528, National Bureau of Economic Research, Inc.
  10. Aghion, Philippe & Howitt, Peter, 1992. "A Model of Growth Through Creative Destruction," Scholarly Articles 12490578, Harvard University Department of Economics.
  11. 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.
  12. 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.
  13. 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.
  14. M. Ishaq Nadiri, 1993. "Innovations and Technological Spillovers," NBER Working Papers 4423, National Bureau of Economic Research, Inc.
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Citations

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Cited by:
  1. Engelbrecht, Hans-Jurgen, 1998. "A communication perspective on the international information and knowledge system," Information Economics and Policy, Elsevier, vol. 10(3), pages 359-367, September.
  2. Dan Ben-David & Ayal Kimhi, 2001. "Trade and the rate of income convergence," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 13(4), pages 419-441.
  3. Wolfgang Keller, 1996. "Are International R&D Spillovers Trade-related? Analyzing Spillovers among Randomly Matched Trade Partners," International Trade 9608002, EconWPA.
  4. Hartmut Egger & Peter Egger, . "International Outsourcing and the Productivity of Low-skilled Labour in the EU," WIFO Working Papers 152, WIFO.
  5. Baldwin, Richard E. & Forslid, Rikard, 1999. "Incremental trade policy and endogenous growth:: A q-theory approach," Journal of Economic Dynamics and Control, Elsevier, vol. 23(5-6), pages 797-822, April.
  6. Richard E. Baldwin & Rikard Forslid, 1998. "Incremental Trade and Endogenous Growth: A q-Theory Approach," NBER Working Papers 6477, National Bureau of Economic Research, Inc.

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