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Geopolitical Frictions and Technology Transfers: Theory and Empirics

Author

Listed:
  • Oscar Camacho

    (The Brattle Group)

  • Michelle Garfinkel

    (University of California-Irvine)

  • Constantinos Syropoulos

    (School of Economics, Drexel University)

  • Yoto Yotov

    (School of Economics, Drexel University)

Abstract

How do geopolitical frictions matter for the diffusion of technology? Based on a guns-versus-butter model involving two countries (a technology leader and a technology laggard), we study the direct and indirect effects dual-use (or general-purpose) technology transfers on the countries' payoffs and hence their preferences over such transfers. A central finding is that, when the initial technological distance between the two countries is large whereas the degree of output security is low and the laggard's capacity to absorb state-of-the-art technologies is relatively limited, the leader has an incentive to block a transfer to the laggard. The analysis also unveils the possible emergence of a "low-technology trap."" Using data on cross-border patent flows as a proxy for technology transfers and sanctions as a proxy for conflict over the 1995-2018 period, we present evidence in support of the theory.

Suggested Citation

  • Oscar Camacho & Michelle Garfinkel & Constantinos Syropoulos & Yoto Yotov, 2025. "Geopolitical Frictions and Technology Transfers: Theory and Empirics," Working Papers 202535, Center for Global Policy Analysis, LeBow College of Business, Drexel University.
    • Handle: RePEc:drx:wpaper:202535
    as

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    File URL: https://www.lebow.drexel.edu/sites/default/files/2025-09/202535-geopolitical-frictions.pdf
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    References listed on IDEAS

    as
    1. Robert E. Hall & Charles I. Jones, 1999. "Why do Some Countries Produce So Much More Output Per Worker than Others?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 114(1), pages 83-116.
    2. Stergios Skaperdas & Constantinos Syropoulos, 1997. "The Distribution of Income in the Presence of Appropriative Activities," Economica, London School of Economics and Political Science, vol. 64(253), pages 101-1117, February.
    3. Jacob Howard & Keith E. Maskus & William Ridley, 2025. "The Impacts of Intellectual‐Property Related Preferential Trade Agreements on Bilateral Patent Applications," Review of International Economics, Wiley Blackwell, vol. 33(2), pages 466-485, May.
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    More about this item

    Keywords

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    JEL classification:

    • D30 - Microeconomics - - Distribution - - - General
    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions
    • F51 - International Economics - - International Relations, National Security, and International Political Economy - - - International Conflicts; Negotiations; Sanctions
    • 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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