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The effect of technological innovation on international trade : a nonlinear approach

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Author Info
Márquez-Ramos, Laura
Martínez-Zarzoso, Inmaculada

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Abstract

This paper focuses on the relationship between technological innovation and international trade. In particular, the effect of technological achievement on exports is studied. In order to measure technological innovation, the technological achievement index (TAI) is used, thus providing a summary of a society's technological achievements and allowing countries to be classified into four groups according to their level of technological innovation: Leaders, Potential Leaders, Dynamic Adopters and Marginalised. The effect of technological variables on sectoral exports is analysed using a gravity model of trade. The existence of a possible non-linear relationship is also investigated, since the effect of improved technological innovation on trade could vary according to the technological achievement in countries. Results show the expected positive effect of technological innovation on export performance and the existence of non-linearities is confirmed. A “U-shaped” relationship is found between exports and creation of technology and between exports and diffusion of old innovations, whereas an inverted–“U-shaped” relationship is found between exports and diffusion of recent innovations and between exports and human skills. --

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Paper provided by Kiel Institute for the World Economy in its series Economics Discussion Papers with number 2009-24.

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Date of creation: 2009
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Handle: RePEc:zbw:ifwedp:7588

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Related research
Keywords: Technological innovation; sectoral exports; gravity model; panel data; non-linearities;

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  1. Loungani, Prakash & Mody, Ashoka & Razin, Assaf, 2002. "The Global Disconnect: The Role of Transactional Distance and Scale Economies in Gravity Equations," Scottish Journal of Political Economy, Scottish Economic Society, vol. 49(5), pages 526-43, December. [Downloadable!] (restricted)
  2. Rauch, James E., 1999. "Networks versus markets in international trade," Journal of International Economics, Elsevier, vol. 48(1), pages 7-35, June. [Downloadable!] (restricted)
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  3. Tang, Linghui, 2006. "What accounts for the growth of trade in differentiated goods: Economic causes or technological imperatives?," Economics Letters, Elsevier, vol. 91(2), pages 204-209, May. [Downloadable!] (restricted)
  4. Jonathan Eaton & Samuel Kortum, 1997. "Technology and Bilateral Trade," Boston University - Institute for Economic Development 79, Boston University, Institute for Economic Development.
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  5. Fink, Carsten & Mattoo, Aaditya & Neagu, Ileana Cristina, 2005. "Assessing the impact of communication costs on international trade," Journal of International Economics, Elsevier, vol. 67(2), pages 428-445, December. [Downloadable!] (restricted)
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  6. J. M. C. Santos Silva & Silvana Tenreyro, 2006. "The Log of Gravity," The Review of Economics and Statistics, MIT Press, vol. 88(4), pages 641-658, 09. [Downloadable!] (restricted)
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