Trade patterns and international technology spillovers: evidence from patent citations

In this paper, we empirically examine the relationship between bilateral trade patterns and international technology spillovers for a sample of 55 countries during 1995–2006. Technology spillovers are measured by using patent citation data taken from the United States Patent and Trademark Office. The main contribution of this paper is to provide new evidence that the size of technology spillovers significantly varies according to bilateral trade patterns. In particular, horizontal intra-industry trade is associated with larger technology spillovers than vertical intra-industry trade, and the size of technology spillovers is smallest when the trade pattern is inter-industry trade. Given the fact that trade between technologically advanced countries has a higher share of horizontal intra-industry trade than trade between other combinations of countries, our findings suggest that trade may enlarge, rather than narrow, the technology gap between technologically advanced and less-advanced countries. Copyright Kiel Institute 2015