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Weightless Machines and Costless Knowledge An Empirical Analysis of Trade and Technology Diffusion

Author

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  • Giorgio Barba Navaretti

    (University of Ancona; Centro Studi Luca d´Agliano; Fondazione Eni Enrico Mattei)

  • Isidro Soloaga

    (Inter- American Development Bank; University of Maryland College Park)

Abstract

This paper examines the impact of imported technologies on productivity for a sample of developing and transition countries in Central and Eastern Europe and in the Southern Mediterranean. These economies are getting more and more integrated to the European Union. The paper departs from earlier studies of international technology diffusion as it focuses on the technology embodied in the machines imported. Earlier works had mostly focussed on spillovers of foreign R&D conveyed through trade, without controlling for the characteristics of the goods imported. The paper jointly estimates the choice of foreign technology and its impact on domestic productivity for a set of manufacturing sectors. The technological level of the machines imported is proxied by an index relating the unit value of the machines imported by a given country to the unit value of the same machines imported by the US. The paper finds a constant and even increasing gap between the unit value of the machines imported by the US and the machines imported by our sample of developing countries. It shows that this gap is significantly persistent and that it is higher the lower the level of GDP of the importing country. The empirical analysis also finds that productivity growth in manufacturing depends positively on the type of machines imported in a given industry. Consequently, although the choice of developing countries to buy cheaper and less sophisticated machines is optimal, given relative factor prices and their endowments of technology, this choice has a cost in terms of long run productivity growth.

Suggested Citation

  • Giorgio Barba Navaretti & Isidro Soloaga, 2001. "Weightless Machines and Costless Knowledge An Empirical Analysis of Trade and Technology Diffusion," Development Working Papers 154, Centro Studi Luca d'Agliano, University of Milano.
  • Handle: RePEc:csl:devewp:154
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Epifani Paolo, 2003. "Trade liberalization, Firm Performances and Labor Market Outcomes in the Developing World, what Can We Learn From Micro-Level Data?," Rivista italiana degli economisti, Società editrice il Mulino, pages 455-486.
    2. Meschi, Elena & Vivarelli, Marco, 2007. "Globalization and Income Inequality," IZA Discussion Papers 2958, Institute for the Study of Labor (IZA).
    3. Habi Yaremye, Alexis, 2008. "Economic Proximity and Technology Flows: South Africa?s Influence and the Role of Technological Interaction in Botswana?s Diversification Effort," WIDER Working Paper Series 092, World Institute for Development Economic Research (UNU-WIDER).
    4. Li, Yao Amber, 2014. "Borders and distance in knowledge spillovers: Dying over time or dying with age?—Evidence from patent citations," European Economic Review, Elsevier, pages 152-172.
    5. MacDonald, Ronald & Majeed, Muhammad Tariq, 2010. "Distributional and Poverty Consequences of Globalization: A Dynamic Comparative Analysis for Developing Countries," SIRE Discussion Papers 2010-62, Scottish Institute for Research in Economics (SIRE).
    6. Meschi, Elena & Vivarelli, Marco, 2009. "Trade and Income Inequality in Developing Countries," World Development, Elsevier, vol. 37(2), pages 287-302, February.
    7. Adriana Peluffo & Dayna Zaclicever, 2013. "Imported Intermediates and Productivity: Does Absorptive Capacity Matter? A Firm-Level Analysis for Uruguay," Documentos de Trabajo (working papers) 0613, Department of Economics - dECON.
    8. Alexis Habiyaremye & Thomas H. W. Ziesemer, 2012. "Export demand elasticities and productivity as determinants of growth: estimates for Mauritius," Applied Economics, Taylor & Francis Journals, vol. 44(9), pages 1143-1158, March.
    9. Habiyaremye, Alexis & Ziesemer, Thomas, 2008. "Export Demand Elasticities as Determinants of Growth: Estimates for Mauritius," MERIT Working Papers 072, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    10. Eric Rasmusen, 2007. "A Reputation Model of Quality in North-South Trade," Working Papers 2007-06, Indiana University, Kelley School of Business, Department of Business Economics and Public Policy.
    11. Rasmusen, Eric, 2017. "A model of trust in quality and North–South trade," Research in Economics, Elsevier, pages 159-170.
    12. Alexis Habiyaremye, 2013. "Imported Capital Goods and Manufacturing Productivity: Evidence from Botswana's Manufacturing Sector," South African Journal of Economics, Economic Society of South Africa, vol. 81(4), pages 581-604, December.

    More about this item

    JEL classification:

    • F15 - International Economics - - Trade - - - Economic Integration
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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