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On the quantity and quality of knowledge - the impact of openness and foreign research and development on North-North and North-South technology spillovers

  • Schiff, Maurice
  • Wang, Yanling

Knowledge accumulation means either new knowledge (an increase in its quality), greater access to existing knowledge (an increase in its quantity), or both. The authors examine the relative contribution of these two components of knowledge to total factor productivity (TFP) for North-North and North-South trade-related knowledge diffusion, with quantity, proxied by openness, and quality by the research and development (R&D) content of trade. The measure of foreign R&D used in the literature on trade-related knowledge diffusion, imposes equal contributions to TFP of openness, and of R&D content of trade. The authors'analysis show that R&D has a greater impact on TFP, than openness for North-North trade and, conversely, openness has a greater impact on TFP, than R&D for North-South trade. These results imply that the impact of openness on TFP in developing (industrial) countries is larger (smaller) than previously obtained in this literature, and that developing countries can obtain larger productivity gains from trade liberalization than previously thought.

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Paper provided by The World Bank in its series Policy Research Working Paper Series with number 3190.

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Date of creation: 01 Jan 2004
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Handle: RePEc:wbk:wbrwps:3190
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  1. Coe, David T & Helpman, Elhanan & Hoffmaister, Alexander W, 1997. "North-South R&D Spillovers," Economic Journal, Royal Economic Society, vol. 107(440), pages 134-49, January.
  2. Wolfgang Keller, 1997. "Are International R&D Spillovers Trade-Related? Analyzing Spillovers Among Randomly Matched Trade Partners," NBER Working Papers 6065, National Bureau of Economic Research, Inc.
  3. Keller, Wolfgang, 2001. "Geographic Localization of International Technology Diffusion," CEPR Discussion Papers 2706, C.E.P.R. Discussion Papers.
  4. David T. Coe & Elhanan Helpman, 1993. "International R&D Spillovers," NBER Working Papers 4444, National Bureau of Economic Research, Inc.
  5. Macdonald, G.M., 1988. "Competitive Diffusion," University of Chicago - Economics Research Center 88-10, Chicago - Economics Research Center.
  6. Greenwood, J., 1996. "The Third Industrial Revolution," RCER Working Papers 435, University of Rochester - Center for Economic Research (RCER).
  7. David Greenaway & Neil Foster & Rod Falvey, 2002. "North-South Trade, Knowledge Spillovers and Growth," European Economy Group Working Papers 15, European Economy Group.
  8. Wolfgang Keller, 1997. "Trade and the Transmission of Technology," Development and Comp Systems 9707001, EconWPA.
  9. Keller, Wolfgang, 2000. "Do Trade Patterns and Technology Flows Affect Productivity Growth?," World Bank Economic Review, World Bank Group, vol. 14(1), pages 17-47, January.
  10. Boyan Jovanovic & Yaw Nyarko, 1994. "Learning By Doing and the Choice of Technology," NBER Working Papers 4739, National Bureau of Economic Research, Inc.
  11. Andrew Atkeson & Patrick J. Kehoe, 2001. "The transition to a new economy after the Second Industrial Revolution," Working Papers 606, Federal Reserve Bank of Minneapolis.
  12. Lichtenberg, Frank R. & Pottelsberghe de la Potterie, Bruno v., 1998. "International R&D spillovers: A comment," European Economic Review, Elsevier, vol. 42(8), pages 1483-1491, September.
  13. Boyan Jovanovic & Glenn MacDonald, 1993. "Competitive Diffusion," NBER Working Papers 4463, National Bureau of Economic Research, Inc.
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