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Education, Governance, and Trade- and Distance-related Technology Diffusion: Accounting for the Latin America-East Asia TFP Gap, and the TFP Impact of South America’s Greater Distance to the North

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  • Schiff, Maurice
  • Wang, Yanling

Abstract

This paper examines the impact of education, governance and North-South trade- and distance-related technology diffusion on TFP in the South, focusing on South America (SA), Mexico, Latin America (LA) and East Asia for the 32-year period preceding the Great Recession (1976-2007) in a new model that integrates models of trade-related and distance-related international technology diffusion. Our model’s explanatory power is 38% (62%) greater than that of the main trade-related (distance-related) model. Findings are: i) TFP increases with education, trade, governance (ETG) and imports’ R&D content, and declines with distance to the North; ii) an increase in LA’s ETG to East Asia’s level raises LA’s TFP by some 100% and accounts for about 75% of its TFP gap with East Asia; iii) raising LA’s education to East Asia’s level has a larger impact on TFP and on the TFP gap than raising governance or openness; iv) the TFP impact on South America relative to Mexico due to its greater distance to US-Canada (Europe)(Japan) is −18.9 (−2.13) (−9.78)%, with an overall impact of −12.4%.

Suggested Citation

  • Schiff, Maurice & Wang, Yanling, 2017. "Education, Governance, and Trade- and Distance-related Technology Diffusion: Accounting for the Latin America-East Asia TFP Gap, and the TFP Impact of South America’s Greater Distance to the North," GLO Discussion Paper Series 126, Global Labor Organization (GLO).
  • Handle: RePEc:zbw:glodps:126
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    References listed on IDEAS

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    1. Paul E. Peterson & Ludger Woessmann, 2010. "New Empirical Analysis in the Economics of Education," Economic Journal, Royal Economic Society, vol. 120(546), pages 183-186, August.
    2. Lei Zhu & Bang Nam Jeon, 2007. "International R&D Spillovers: Trade, FDI, and Information Technology as Spillover Channels," Review of International Economics, Wiley Blackwell, vol. 15(5), pages 955-976, November.
    3. de Meulemeester, Jean-Luc & Rochat, Denis, 1995. "A causality analysis of the link between higher education and economic development," Economics of Education Review, Elsevier, vol. 14(4), pages 351-361, December.
    4. anonymous, 2010. "The economic importance of being educated," Forefront, Federal Reserve Bank of Cleveland, issue Fall, pages 6-9.
    5. Maurice Schiff & Yanling Wang, 2006. "North-South and South-South trade-related technology diffusion: an industry-level analysis of direct and indirect effects," Canadian Journal of Economics, Canadian Economics Association, vol. 39(3), pages 831-844, August.
    6. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
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    More about this item

    Keywords

    Education; Governance; Trade; Distance; Technology Diffusion; Productivity Impact; Latin America; East Asia;

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • I25 - Health, Education, and Welfare - - Education - - - Education and Economic Development
    • O19 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - International Linkages to Development; Role of International Organizations
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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