Spillovers Through Imports and Exports

International trade is growing in importance and in real terms for many countries. As technology expands, so too does international communications which in turn can result in more knowledge spillovers. This paper explores the possibility that importing may not be the only means by which international knowledge spillovers occur. It analyzes international knowledge spillovers by examining the role of exporting as a mechanism for transmitting these spillovers. Unlike previous research this work pulls together both channels of international trade for transmitting knowledge spillovers.This paper extends David Coe and Elhanan Helpman (1995) by examining the relationship between total factor productivity and the acquisition of productive knowledge and illustrating the importance of knowledge spillovers. This paper shows that for the OECD countries examined, including the United States, international knowledge spillovers are transmitted and received as a result of trade. Both importing and exporting facilitate knowledge spillovers but they are not identical. In this analysis, some countries receive and provide more productive knowledge spillovers than others. The production of new productive knowledge leads to an ever-increasing stock of knowledge and this capital stock is not national but international.