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North-south trade-related technology diffusion : virtuous growth cycles in Latin America

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  • Schiff, Maurice
  • Wang, Yanling

Abstract

This paper examines the impact on total factor productivity in Latin America and the Caribbean (LAC) and in other developing countries of trade-related technology diffusion from the North) (denoted by NRD), education, and governance, research and development The NRD value for a developing country is an average of R&D stocks in the North, with weights related to openness with the North. Industry-specific NRD is based on the North’s industry-specific R&D, North-South trade patterns, and input-output relations in the South. The main findings are: i) the impact of education and governance on TFP is significantly larger in LAC than in other developing countries, while the opposite holds for NRD; and ii) education, governance and NRD have additional effects on TFP in LAC’s R&D-intensive industries through their interaction with either or both of the other two variables; and iii) since NRD increases with openness and with R&D in the North, both variables raise the South's TFP directly as well as through their interaction with education and governance. These interaction effects imply that increasing the level of any of the three policy variables -- education, governance, or openness --results in virtuous growth cycles. These are smallest under an increase in one of these variables, stronger under an increase in two of them and 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," Policy Research Working Paper Series 5300, The World Bank.
  • Handle: RePEc:wbk:wbrwps:5300
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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

    Agricultural Knowledge&Information Systems; Rural Development Knowledge&Information Systems; E-Business; Research and Development; Governance Indicators;

    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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