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Technology Transfer Through Trade


  • Mombert Hoppe

    (DG Development, European Commission)


This paper examines the role that trade plays in economic development through the channel of technology transfer, approximated by total factor productivity. Three strains of factors influence the process of technology transfer; direct effort that is taken to transfer technologies, the capacity to adopt technologies, and differences in the underlying conditions between donor- and receiving countries. In this context, trade in (capital) goods allows technology import and improved input decisions. Second, trade opens export markets, allowing learning-by-doing. Third and most importantly, trade increases the set of accessible technologies, increasing the scope for imitation. The theoretical insights are compared to the empirical literature that deals with trade and technology transfer. Not surprisingly, it turns out that openness and human capital have a positive influence on the transfer of technology. Yet methodological problems with the data weaken the practical significance of the results, especially as the precise and fundamental mechanism of spillovers and the factors that condition the degree of technology transfer are not profoundly illuminated. These underlying processes have to be better understood in order to be able to give valuable policy recommendations that will go beyond the general advice of increasing openness and human capital formation.

Suggested Citation

  • Mombert Hoppe, 2005. "Technology Transfer Through Trade," Working Papers 2005.19, Fondazione Eni Enrico Mattei.
  • Handle: RePEc:fem:femwpa:2005.19

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    References listed on IDEAS

    1. David J. Teece, 2008. "Technology Transfer By Multinational Firms: The Resource Cost Of Transferring Technological Know-How," World Scientific Book Chapters,in: The Transfer And Licensing Of Know-How And Intellectual Property Understanding the Multinational Enterprise in the Modern World, chapter 1, pages 1-22 World Scientific Publishing Co. Pte. Ltd..
    2. Alwyn Young, 1991. "Learning by Doing and the Dynamic Effects of International Trade," NBER Working Papers 3577, National Bureau of Economic Research, Inc.
    3. Luis A. Rivera-Batiz & Paul M. Romer, 1991. "Economic Integration and Endogenous Growth," The Quarterly Journal of Economics, Oxford University Press, vol. 106(2), pages 531-555.
    4. Alwyn Young, 1991. "Learning by Doing and the Dynamic Effects of International Trade," The Quarterly Journal of Economics, Oxford University Press, vol. 106(2), pages 369-405.
    5. Raymond Vernon, 1966. "International Investment and International Trade in the Product Cycle," The Quarterly Journal of Economics, Oxford University Press, vol. 80(2), pages 190-207.
    6. Alwyn Young, 1995. "The Tyranny of Numbers: Confronting the Statistical Realities of the East Asian Growth Experience," The Quarterly Journal of Economics, Oxford University Press, vol. 110(3), pages 641-680.
    7. Slavo Radosevic, 1999. "International Technology Transfer and Catch-Up in Economic Development," Books, Edward Elgar Publishing, number 1386.
    8. Xu, Bin, 2000. "Trade, FDI, and International Technology Diffusion," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 15, pages 585-601.
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    Cited by:

    1. Damijan, Jože P. & Rojec, Matija & Majcen, Boris & Knell, Mark, 2013. "Impact of firm heterogeneity on direct and spillover effects of FDI: Micro-evidence from ten transition countries," Journal of Comparative Economics, Elsevier, vol. 41(3), pages 895-922.
    2. López-Pueyo, Carmen & Barcenilla-Visús, Sara & Sanaú, Jaime, 2008. "International R&D spillovers and manufacturing productivity: A panel data analysis," Structural Change and Economic Dynamics, Elsevier, vol. 19(2), pages 152-172, June.
    3. 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.
    4. Joze P. Damijan & Andreja Jaklic & Matija Rojec, 2005. "Do External Knowledge Spillovers Induce Firms'Innovations? Evidence from Slovenia," LICOS Discussion Papers 15605, LICOS - Centre for Institutions and Economic Performance, KU Leuven.
    5. Rodolfo Cermeño & Sirenia Várquez, 2005. "Technological Backwardness in Agriculture: Is It due to Lack of R&D Expenditures, Human Capital and Openness to International Trade?," DEGIT Conference Papers c010_014, DEGIT, Dynamics, Economic Growth, and International Trade.
    6. Krammer, Marius Sorin, 2008. "International R&D spillovers in transition countries: the impact of trade and foreign direct investment," Kiel Advanced Studies Working Papers 446, Kiel Institute for the World Economy (IfW).
    7. Damijan, Jože P. & Kostevc, Crt, 2007. "Knowledge Transfer, Innovation and Growth," Papers DYNREG06, Economic and Social Research Institute (ESRI).

    More about this item


    Technology transfer; Trade; Economic growth; Total factor productivity;

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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