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North-South Technology Spillovers: The Relative Impact of Openness and Foreign R&D

  • Maurice Schiff
  • Yanling Wang

This paper examines the relative contribution of openness and the R&D content of trade to North-South trade-related knowledge diffusion and TFP growth. The measure of foreign R&D used in the literature on trade-related knowledge diffusion imposes identical contributions to TFP of openness and the R&D content of trade. We show that this restriction is not warranted and that openness has a greater impact on TFP than R&D. This finding is particularly strong in low R&D-intensity industries and - as might be expected - not as strong in R&D-intensive ones. The results indicate that the impact of openness on TFP in developing countries is larger than previously obtained in this literature, and that developing countries can obtain larger productivity gains from trade liberalization than previously thought.

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Article provided by Taylor & Francis Journals in its journal International Economic Journal.

Volume (Year): 24 (2010)
Issue (Month): 2 ()
Pages: 197-207

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Handle: RePEc:taf:intecj:v:24:y:2010:i:2:p:197-207
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  1. Coe, David T. & Helpman, Elhanan, 1995. "International R&D spillovers," European Economic Review, Elsevier, vol. 39(5), pages 859-887, May.
  2. David T. Coe & Elhanan Helpman & Alexander Hoffmaister, 1995. "North-South R&D Spillovers," NBER Working Papers 5048, National Bureau of Economic Research, Inc.
  3. Rodolfo E. Manuelli & Ananth Seshadri, 2013. "Frictionless technology diffusion: the case of tractors," Working Papers 2013-022, Federal Reserve Bank of St. Louis.
  4. Greenwood, J., 1996. "The Third Industrial Revolution," RCER Working Papers 435, University of Rochester - Center for Economic Research (RCER).
  5. David Greenaway & Neil Foster & Rod Falvey, 2002. "North-South Trade, Knowledge Spillovers and Growth," European Economy Group Working Papers 15, European Economy Group.
  6. Schiff, Maurice & Wang, Yanling & Olarreaga, Marcelo, 2002. "Trade-related technology diffusion and the dynamics of North-South and South-South integration," Policy Research Working Paper Series 2861, The World Bank.
  7. Lumenga-Neso, Olivier & Olarreaga, Marcelo & Schiff, Maurice, 2005. "On `indirect' trade-related R&D spillovers," European Economic Review, Elsevier, vol. 49(7), pages 1785-1798, October.
  8. Paul M Romer, 1999. "Increasing Returns and Long-Run Growth," Levine's Working Paper Archive 2232, David K. Levine.
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