Our website will undergo scheduled maintenance on the morning of Thursday, August 11, 2022. During this time, connection to our website and some of its features may be unavailable. Thank you for your patience and we apologize for any inconvenience.

Report

The dual nature of trade: measuring its impact on imitation and growth


Abstract: Imports of goods that embody foreign technology raise a country's output directly as inputs into production and indirectly through reverse-engineering of these goods, which contributes to domestic imitation and innovation. This paper first quantifies spillovers from high-technology imports from developed countries to domestic imitation and innovation in both developed and developing countries. It then considers the contribution of foreign and domestic innovation to real per capita GDP growth. ; International patent data for forty countries from 1970 to 1985 are used to create proxies for imitation and innovation. High-technology imports, as well as quality-adjusted research and the size of the economy, positively affect both domestic imitation and innovation. Transportation and communication infrastructure positively affects imitation, but does not appear to play a role in innovation. Interestingly, foreign direct investment, often considered an important mechanism for technological diffusion to developing nations, does not significantly affect either domestic innovation or imitation. Finally, while both foreign and domestic innovation contribute positively to real per capita GDP growth, foreign technology from developed countries appears to play a far greater role in growth than domestic technology.

Keywords: Embodied Technology; Technological Diffusion; Learning-to-Learn; Imitation; Innovation; North-South Trade; Endogenous Growth; Convergence;

JEL Classification: F1; F43; O14; O30; O31; O34; O40;

Access Documents

Authors

Bibliographic Information

Provider: Federal Reserve Bank of New York

Part of Series: Staff Reports

Publication Date: 1998-08-01

Number: 44

Note: For a published version of this report, see Michelle Connolly, "The Dual Nature of Trade: Measuring Its Impact on Imitation and Growth," Journal of Development Economics 72, no. 1 (October 2003): 31-55.