North-South R&D Spillovers

The authors examine the extent to which developing countries that do little, if any, research and development themselves benefit from R&D that is performed in the industrial countries. By trading with an industrial country that has a large 'stock of knowledge' from its cumulative R&D activities, a developing country can boost its productivity by importing a larger variety of intermediate products and capital equipment embodying foreign knowledge, and by acquiring useful information that would otherwise be costly to obtain. The authors' results, based on data for seventy-seven developing countries, suggest that R&D spillovers from twenty-two industrial countries over 1971-90 are substantial. Copyright 1997 by Royal Economic Society.