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North-South Trade-Related Technology Diffusion: Virtuous Growth Cycles in Latin America

Author

Listed:
  • Schiff, Maurice

    () (World Bank)

  • Wang, Yanling

    () (Carleton University)

Abstract

This paper examines the impact on TFP in Latin America and the Caribbean (LAC) and in other developing countries (DEV) of trade-related foreign R&D (NRD), education and governance. The measures of NRD are constructed based on industry-specific R&D in the North, North-South trade patterns, and input-output relations in the South. The main findings are: i) education and governance have a much larger direct effect on TFP in LAC than in DEV, while the opposite holds for the North's R&D; and ii) education and governance have an additional impact on TFP in R&D-intensive industries through their interaction with NRD in LAC but not in DEV. These interaction effects imply that increasing the level of any of the three policy variables – education, governance or openness – result in virtuous growth cycles. These are smallest under an increase in trade, education or governance, are stronger under an increase in two of these three policy variables, and are strongest under an increase in all three variables.

Suggested Citation

  • Schiff, Maurice & Wang, Yanling, 2010. "North-South Trade-Related Technology Diffusion: Virtuous Growth Cycles in Latin America," IZA Discussion Papers 4943, Institute for the Study of Labor (IZA).
  • Handle: RePEc:iza:izadps:dp4943
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    References listed on IDEAS

    as
    1. Elhanan Helpman & David T. Coe, 1993. "International RandD Spillovers," IMF Working Papers 93/84, International Monetary Fund.
    2. Lumenga-Neso, Olivier & Olarreaga, Marcelo & Schiff, Maurice, 2001. "On"indirect"trade-related research and development spillovers," Policy Research Working Paper Series 2580, The World Bank.
    3. Coe, David T & Helpman, Elhanan & Hoffmaister, Alexander W, 1997. "North-South R&D Spillovers," Economic Journal, Royal Economic Society, vol. 107(440), pages 134-149, January.
    4. Nicita, Alessandro & Olarreaga, Marcelo, 2001. "Trade and production, 1976-99," Policy Research Working Paper Series 2701, The World Bank.
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    More about this item

    Keywords

    trade; technology diffusion; growth; Latin America;

    JEL classification:

    • F15 - International Economics - - Trade - - - Economic Integration
    • O19 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - International Linkages to Development; Role of International Organizations
    • 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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