How does trade-mediated technology transfer affect interregional and intersectoral competition? Exploring multi-sectoral effects in a global trade model

Das, Gouranga (2009): How does trade-mediated technology transfer affect interregional and intersectoral competition? Exploring multi-sectoral effects in a global trade model. Published in: African Journal of Business Management , Vol. 5, No. 14 (1 April 2011): pp. 5871-5886.

Abstract

In this paper, all technology transfers are embodied in trade flows within a three-region, six-tradedcommodity version of the GTAP model. 4% Hicks-Neutral technical progress in heavy manufacturing in one region has uneven impacts on productivity elsewhere. Why? Destination regions’ ability to harness new technology depends on their absorptive capacity and on the structural congruence of the source and destination. Together with trade volume, these two factors determine the recipient’s success in capturing foreign technology. Sectors, intensive in heavy manufacturing, register higher productivity growth. Inter-regional competition coupled with changes in price relativities, loom large in general equilibrium adjustment. Hicks-neutrality of the TFP (total factor productivity) improvement implies that, at the initial configuration of inputs, the marginal products of land, labour, and capital, change by the same proportion in any region. However, for the experiment conducted, productivity changes and the spillover coefficients dominate the variable impact across sectors and regions.

• Item Type: MPRA Paper
• Language: English
• Keywords: Absorptive capacity, capture parameter, trade, technology, Armington, TFP (total factor productivity)
• Subjects: C - Mathematical and Quantitative Methods > C6 - Mathematical Methods ; Programming Models ; Mathematical and Simulation Modeling > C68 - Computable General Equilibrium Models; F - International Economics > F1 - Trade > F17 - Trade Forecasting and Simulation; O - Economic Development, Innovation, Technological Change, and Growth > O3 - Innovation ; Research and Development ; Technological Change ; Intellectual Property Rights > O33 - Technological Change: Choices and Consequences ; Diffusion Processes; O - Economic Development, Innovation, Technological Change, and Growth > O4 - Economic Growth and Aggregate Productivity

References

Armington, P. A. (1969). “A Theory of Demand for Products Distinguished by Place of Production.” IMF Staff Papers, 16: 159-78.

Coe, D. and E. Helpman. (1995). “International R&D Spillovers.” European Economic Review, 39 (May): 859-87.

Coe, D. T., E. Helpman and Alexander W. Hoffmaister (1997). “North-South R&D Spillovers.” The Economic Journal, 107 (January): 134-49.

----(2008). International R&D spillover and Institutions. IMF working Paper.

Cohen, Wesley M. and Daniel A. Levinthal (1989). “Innovation and Learning: The Two Faces of R&D.” The Economic Journal, 99(September): 569-596.

----and ---(March 1990). “Absorptive Capacity: A New Perspective on Learning and Innovation.” Administrative Science Quarterly, 35(1): 128-52.

Connolly, Michelle P. (1997). “Technology, Trade and Growth: Some Empirical Findings.” New York, FRB (New York), Research Paper, 9727 (September): 1-27.

Cunha, Flavio and James Heckman (2007). "The Technology of Skill Formation." American Economic Review. AEA Papers and Proceedings. May 2007. Vol. 97, No. 2, pp. 31-47.

Das, G. G. (2002): “Trade, Technology and Human Capital: Stylized Facts and Quantitative Evidence”, The World Economy, Vol 25, No. 2, (February 2002): 257-281.

Das, G. G. and A. A. Powell (2001): “Absorption Capacity, Structural Similarity and Embodied Technology Spillovers in a ‘Macro’ Model: An Implementation Within a Computable General Equilibrium Framework”, The Korean Journal of Policy Studies, Vol. 26, No. 1, (August 2001): pp. 111-132.

Hertel, T. W., ed. (1997). Global Trade Analysis: Modeling and Applications. Cambridge, MA, Cambridge University Press. Keller, W. (1997). “Trade and the Transmission of Technology.”, NBER Working Paper , 6113 (July): 1-33+ Appendix. (Cambridge, MA).

Keller, W. (1999). “How Trade Patterns And Technology Flows Affect Productivity Growth”, NBER Working Paper, 6990: 1-30+Appendix (Cambridge, MA).

Keller, W. (2001). “The Geography and Channels of Diffusion at the World’s Technology Frontier”, NBER Working Paper, 8150: 1-28+Appendix (Cambridge, MA).

Kosempel, Stephen (2007). "Interaction between knowledge and technology: a contribution to the theory of development." Canadian Journal of Economics, Vol. 40, No. 4, November: pp. 1237-1260.

McDougall, R. A. (1993) “Two Small Extensions to SALTER”, SALTER Working Paper, No. 12, Industry Commission, Canberra, Australia.

Meijl, Hans. van and Frank van Tongeren (1998). “Trade, Technology Spillovers, and Food Production in China.” Weltwirtschaftliches Archiv, Band 134 (Heft 3): 443-449.

Nelson, Richard R.(1990). “On Technological Capabilities and their Acquisition” in R. E. Evenson and Gustav Ranis (eds.) Science and Technology, Lessons for Development Policy, Westview Press.

OECD (1997). Science, Technology and Industry Scoreboard of Indicators, Paris: OECD.

World Bank (1999). World Development Report 1998/9: Knowledge for Development. New York, Oxford University Press.