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Technology Diffusion, North-South Spillovers and Industrial Location

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  • Arsene Rieber

    () (CARE, University of Rouen)

  • Thi Anh-Dao Tran

    () (CEPN, University of Paris XIII)

Abstract

Relying on a model of economic geography, this paper discusses development opportunities arising from international trade and technology diffusion. We show that either import substitution or trade liberalization may trigger takeoff in the developing country, although these two policies work through different mechanisms. The industrialization process is also influenced by knowledge spillovers: strong international technology diffusion offers better prospects for the developing country to benefit from technological externalities provided abroad. Thus, one objective of the developing country should be to enhance its absorptive capacity in order to exploit these technological externalities. In this context, only import substitution trade policy seems to be successful in financing indigenous learning process. However, this result is strongly dependent on the effectiveness of budgetary resource allocation.

Suggested Citation

  • Arsene Rieber & Thi Anh-Dao Tran, 2002. "Technology Diffusion, North-South Spillovers and Industrial Location," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 27(1), pages 25-39, June.
  • Handle: RePEc:jed:journl:v:27:y:2002:i:1:p:25-39
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    1. Paul Krugman & Anthony J. Venables, 1995. "Globalization and the Inequality of Nations," The Quarterly Journal of Economics, Oxford University Press, vol. 110(4), pages 857-880.
    2. Puga, Diego & Venables, Anthony J, 1999. "Agglomeration and Economic Development: Import Substitution vs. Trade Liberalisation," Economic Journal, Royal Economic Society, vol. 109(455), pages 292-311, April.
    3. Keller, Wolfgang, 1996. "Absorptive capacity: On the creation and acquisition of technology in development," Journal of Development Economics, Elsevier, vol. 49(1), pages 199-227, April.
    4. Baldwin, Richard E & Martin, Philippe & Ottaviano, Gianmarco I P, 2001. "Global Income Divergence, Trade, and Industrialization: The Geography of Growth Take-Offs," Journal of Economic Growth, Springer, vol. 6(1), pages 5-37, March.
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