North-South Trade-Related Technology Diffusion: Virtuous Growth Cycles in Latin America

22 Pages Posted: 29 Jun 2010 Last revised: 16 Apr 2023

See all articles by Maurice Schiff

Maurice Schiff

Fellow, Institute for the Study of Labor (IZA)

Yanling Wang

Carleton University

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Abstract

This paper examines the impact on TFP in Latin America and the Caribbean (LAC) and in other developing countries (DEV) of trade-related foreign R&D (NRD), education and governance. The measures of NRD are constructed based on industry-specific R&D in the North, North-South trade patterns, and input-output relations in the South. The main findings are: i) education and governance have a much larger direct effect on TFP in LAC than in DEV, while the opposite holds for the North's R and ii) education and governance have an additional impact on TFP in R&D-intensive industries through their interaction with NRD in LAC but not in DEV. These interaction effects imply that increasing the level of any of the three policy variables – education, governance or openness – result in virtuous growth cycles. These are smallest under an increase in trade, education or governance, are stronger under an increase in two of these three policy variables, and are strongest under an increase in all three variables.

Keywords: growth, technology diffusion, trade, Latin America

JEL Classification: F15, O19, O33

Suggested Citation

Schiff, Maurice W. and Wang, Yanling, North-South Trade-Related Technology Diffusion: Virtuous Growth Cycles in Latin America. IZA Discussion Paper No. 4943, Available at SSRN: https://ssrn.com/abstract=1631078 or http://dx.doi.org/10.2139/ssrn.1631078

Maurice W. Schiff (Contact Author)

Fellow, Institute for the Study of Labor (IZA) ( email )

Bonn
Germany

Yanling Wang

Carleton University ( email )

1125 Colonel By Drive
Ottawa, Ontario K1S 5B6
Canada

HOME PAGE: http://https://carleton.ca/npsia/people/yanling-wang/

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