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Can Trade Liberalization Serve International Technology Diffusion in Developing Countries?

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  • Kerkelä, Leena

Abstract

Is trade liberalization a key to international technology diffusion in developing countries? This research continues the work done in the area of Regional Trading Agreements (RTAs) between the European Union and Southern African countries (e.g. Kerkelä et al. 2000, Lewis et al. 2002) focusing especially on industries that are prominent to international technology diffusion (Keller 2001, Mohnen 2001). Within the regional subset (EU and Africa), correlation between the income level and the share of R&D industries in the absorption is found to motivate the approach. In the simulations where different initiatives between SADC countries and individual / joint initiatives between the European Union and Southern African countries are simulated with the GTAP model, we look at the effects especially on the imports. These initiatives include: free trade area between South Africa and EU, SADC free trade area, Regional Economic Partnership agreement (REPA) between SADC countries and the EU and the optional GSP arrangement for LDC-countries in Southern Africa if REPAs as FTAs would not realize. The preliminary results reveal that the effect of RTAs on the imports and domestic production in R & D industries is marginal and rather decreasing. The Southern African countries will specialize even more in agricultural production and the increasing exports are used for importing mainly processed food. In overall the share of high-tech commodities in imports decrease slightly. Structural adjustment does not converge to industrial structures in Europe. We also discuss the role of South Africa as a growth pole from the technology diffusion perspective and question the role of the European Union as a uniform trading partner when technology diffusion is taken into account. From the development perspective the RTAs do not seem to be the key to technological development or catching up and other policy means are necessary for developing countries.

Suggested Citation

  • Kerkelä, Leena, 2003. "Can Trade Liberalization Serve International Technology Diffusion in Developing Countries?," Conference papers 331109, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    • Handle: RePEc:ags:pugtwp:331109
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