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Trade and the Transmission of Technology

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  • Wolfgang Keller

    (University of Toronto, University of Wisconsin, and NBER)

Abstract

I present a model of R&D-driven growth which predicts that technology, in form of product designs and created through R&D investments, is transmitted to other domestic and foreign sectors by being embodied in differentiated intermediate goods. Empirical results are presented employing data from thirteen manufacturing industries in eight OECD countries over the period of 1970 to 1991. I confirm, first, earlier findings that R&D expenditures are positively related to productivity levels, and estimate an elasticity of TFP with respect to own-industry R&D between 7% and 17%. Second, the receiving industry benefits also from other industries' technology investments, an effect which is at least in part due to trade in embodied technology. I find that the benefit derived from foreign R&D in the same industry is in the order of 50-95% of the productivity effect of own R&D. Third, for domestic interindustry technology flows, the results strongly suggest that trade in goods is not all what matters for technology transmission. I estimate that domestic, outside-industry R&D is one-fifth to one-half as effective in raising productivity as own-industry R&D for these industries.

Suggested Citation

  • Wolfgang Keller, 1997. "Trade and the Transmission of Technology," Development and Comp Systems 9707001, University Library of Munich, Germany.
    • Handle: RePEc:wpa:wuwpdc:9707001
    Note: Type of Document - Latex; prepared on IBM-PC; to print on HP or Postscript; pages: 25 ; figures: one; request from author
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    References listed on IDEAS

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    More about this item

    Keywords

    Research & Development driven productivity growth; intersectoral and international trade of intermediate inputs; intersectoral technology flows;
    All these keywords.

    JEL classification:

    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation

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