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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
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    File URL: https://www.lebow.drexel.edu/sites/default/files/2025-09/202535-geopolitical-frictions.pdf
    File Function: First version, 2025
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    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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