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Trade and technology transfer: a development perspective

Trade and technology transfer: a development perspective. Alessandro Antimiani (INEA) Valeria Costantini (Università Roma Tre) Paolo Liberati (Università Roma Tre). III Workshop PRIN Treia, Macerata 03-04 Febbraio 2010. Outline. Introduction Research questions Literature Review

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Trade and technology transfer: a development perspective

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  1. Trade and technology transfer: a development perspective Alessandro Antimiani (INEA) Valeria Costantini (Università Roma Tre) Paolo Liberati (Università Roma Tre) III Workshop PRIN Treia, Macerata 03-04 Febbraio 2010

  2. Outline • Introduction • Research questions • Literature Review • Methodology PUE&PIEC Treia, 3-4 Feb 2010

  3. Introduction • The process of globalization has led to a greater integration of less developed countries into the world economy • The flows of trade, capital, labour, technology, and information across national borders have accelerated in recent decades and produced the conditions for faster economic growth and transmission of knowledge PUE&PIEC Treia, 3-4 Feb 2010

  4. Introduction • Even though the role of international trade in enhancing economic growth has been recognized (Dollar and Kraay, 2004)… • much more controversies in the scientific and political debate arise when a more general development framework is adopted (Ligon, 2006; Milanovic, 2006). • The impact of globalisation on income distribution and social development may be strongly uneven depending on the domestic capacity to transform economic integration into development opportunities (Deaton, 2005; Stern and Deardorff, 2006). PUE&PIEC Treia, 3-4 Feb 2010

  5. Research questions • To what extent the recent wave of globalisation has increased knowledge transfer from developed economies to developing countries • Which factors play a role in explaining the geography of technological transfer • If technology transfer is an existing phenomenon, which development dimensions are the most affected: it is a matter of pure economic growth, or a wider development perspective could be adopted. PUE&PIEC Treia, 3-4 Feb 2010

  6. Literature review Technology transfer • International technology spillovers are crucial factors in explaining growth performance of advanced economies (Coe and Helpman, 1995) • and international flows are important drivers of such spillovers (Eaton and Kortum, 1996) • Transfer via Trade (Keller, 2009; Madsen, 2007; Saggi, 2000) • Transfer via FDI (Gholami et al., 2006; Keller, 2009; Markusen and Venables, 1999; Saggi, 2000; World Economy Special Issue 2006) • Turning to developing countries this evidence is less strong, because specific national features assume a greater role in explaining the capacity to adopt the imported knowledge PUE&PIEC Treia, 3-4 Feb 2010

  7. Literature review Ancillary conditions • Economic structure similarity (Conley and Ligon, 2002; Franco et al., 2009) • Specific trade/FDI relationships (Acharya and Keller, 2008 for ICT;Lumenga-Neso et al., 2001 for indirect trade flows;Xu and Wang, 1999 for capital goods) • The economic integration degree into international markets (Chinn and Ito, 2006) • The quality of human capital (Coe et al., 2008; Engelbrecht, 1997) • Institutions and the public sector (Coe et al., 2008; Younas, 2009) PUE&PIEC Treia, 3-4 Feb 2010

  8. Literature review Tested effects Of the role of technology transfer • Total Factor Productivity (Acharya and Keller, 2007; Coe et al., 2008; Madsen, 2007; Mendi, 2006; Tang and Coevos, 2008) • Economic Growth (Eaton and Kortum, 1996; Erk et al., 2000; Conley and Ligon, 2002) Of the role of a more general concept of trade openness and capital flows mobility • Capital mobility (Chinn and Ito, 2006; Younas, 2009) • Development dimensions (Dalgin et al., 2004) • Income distribution (Ligon, 2006; Topalova, 2005) PUE&PIEC Treia, 3-4 Feb 2010

  9. Methodology • Export specialization patterns • Similarity matrix (Frenken et al., 2007; Los, 2000) i= importing countries (145) j= exporting countries (OECD) k= 19 manufacturing sectors (Isic Rev.3) PUE&PIEC Treia, 3-4 Feb 2010

  10. Methodology • Technology transfer measured by knowledge stock for each k sector (measuredby patents as in Bottazzi and Peri, 2003; Madsen, 2007) Total import flows or import shares as in Acharya and Keller (2008) only if i and j are neighbouring , otherwise only if PUE&PIEC Treia, 3-4 Feb 2010

  11. Methodology • Different aggregation criteria for the k sectors Simple aggregation, for total transfer or for macro-sectors Variety vs. Concentration We can employ a concentration index (e.g., Herfindahl) as autonomous information or as a weighting factor for technological transfer in absolute value PUE&PIEC Treia, 3-4 Feb 2010

  12. Methodology Test for alternative dependent variables compared with pure economic growth. Selected choices: • Human Development Index (UNDP and WDI) • Human Poverty Index-1 (UNDP and WDI) • Gini index (WDI, UNU-WIDER, Penn World Tables) • Poverty measures (WDI) PUE&PIEC Treia, 3-4 Feb 2010

  13. Methodology Test for alternative representations of the public sector: • Role of the public sector, as revenue to GDP ratio, or government expenditures to GDP ratio (WDI) • Institutional quality, as Rule of Law, Government effectiveness, Corruption index (WDI, Transparency International, Political Risk Service Group) • Combination of these dimensions in order to control for the existence of mutual causal relationships. PUE&PIEC Treia, 3-4 Feb 2010

  14. Selected references Acharya, R., Keller, W., 2008, Technology Transfer through Imports, Canadian Journal of Economics, Vol. 42 (4), pp. 1411-1448. Bottazzi, L., Peri, G., 2003, Innovation and spillovers in regions: Evidence from European patent data, European Economic Review, Vol. 47 (4), pp. 687-710. Coe, D. T., Helpman, E., 1995, International R&D Spillovers, European Economic Review, Vol. 39, pp. 859-887. Coe, D.T., Helpman, E., Hoffmaister, A.W., 2008, International R&D Spillovers and Institutions, NBER Working Papers 14069. Conley, T.G., Ligon, E., 2002, Economic distance and Cross-Country Spillovers, Journal of Economic Growth, 7, 157-187. Dalgin M., Mitra, D., Trindade, V., 2004, Inequality, Nonhomotethic Preferences, and Trade: A Gravity Approach, NBER Working Paper 10800 Deaton, A., 2005, Measuring Poverty in a Growing World (or Measuring Growth in a Poor World), The Review of Economics and Statistics, Vol. 87 (1), pp. 1-19. Dollar, D., Kraay, A., 2004, Trade, growth, and poverty, The Economic Journal, Vol. 114 (493), pp. 22-49. Eaton, J., Kortum, S., 1996, Trade in Ideas: Patenting and Productivity in the OECD, Journal of International Economics, Vol. 40, pp. 251-278. PUE&PIEC Treia, 3-4 Feb 2010

  15. Selected references Engelbrecht, H.J., 1997, International R&D Spillovers, Human Capital and Productivity in OECD Economies: An Empirical investigation, European Economic Review, Vol. 41, pp. 1479-1488. Franco, C., Montresor, S., Vitucci Marzetti, G., 2009, On Indirect Trade-Related R&D Spillovers: the “Average Propagation Length” of foreign R&D, European Corporate Governance Institute. Frenken, K., Van Oort, F., Verburg, T., 2007, Related Variety, Unrelated Variety and Regional Economic Growth, Regional Studies, Vol. 41 (5), pp. 685-697. Gholami, R., Lee, S.Y.T., Heshmati, A., 2006, The Causal Relationship Between Information and Communication Technology and Foreign Direct Investment, UNU-WIDER Working Paper, Helsinki. Keller, 2009, International trade, Foreign Direct Investment, and technology spillovers, NBER Working Paper 15442. Los, B., 2000, The empirical performance of a new inter-industry technology spillover measure, in Saviotti, P.P., Nooteboom, B. (Eds) Technology and Knowledge, pp. 118-151, Edward Elgar, Cheltenham. Lumenga-Neso, O., Olarreaga, M., Schiff, M., 2005, On indirect trade-related R&D Spillovers, European Economic Review, Vol. 49 (7), pp. 1785-1797. Madsen, J., 2007, Technology spillovers through trade and TFP convergence: 135 years of evidence for OECD countries, Journal of International Economics Vol. 72, pp. 464-480. PUE&PIEC Treia, 3-4 Feb 2010

  16. Selected references Markusen, J.R., Venables, A., 1999, Foreign Direct Investment as a Catalyst for Industrial Development, European Economic Review, Vol 43 (2), pp. 335-356. Milanovic, B., 2006, Economic Integration and Income Convergence: not such a Strong Link?, The Review of Economics and Statistics, Vol. 88 (4), pp. 659-670. Saggi, K., 2000, Trade, Foreign Direct Investment, and International Technology Transfer, Policy Research Working Paper No. 2349, The World Bank, Washington DC. Stern, R.M., Deardorff, A.V., 2006, Globalization’s Bystanders: Does Trade Liberalization Hurt Countries That Do Not Participate?, World Development, Vol. 34 (8), pp. 1419-1429. Tang, L., Coveos, P. E., 2008, Embodied and disembodied R&D Spillovers to Developed and Developing Countries, International Business Review, No. 17, pp. 546-558 Topalova, P., 2005, trade Liberalization, Poverty and Inequality: Evidence from Indian Districts, NBER Working Paper Series, No. 11614. World Economy Special Issue 2006,The World Economy, Vol. 29 (19), Xu, B., Wang, J., 1999, Capital Goods Trade and R&D Spillovers in the OECD, Canadian Journal of Economics, Vol. 32, pp. 1258-1274. Younas, J., 2009, Does institutional quality affect capital mobility? Evidence from developing countries, Journal of Institutional Economics, Vol. 5 (2), pp. 207-223. PUE&PIEC Treia, 3-4 Feb 2010

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