Globalization and Technology Diffusion: The Case of Mobile Phones

Abstract

This paper examines to what degree trade, FDI and migration promote cellphone usage in developed and developing countries. Since the usage of cellphones requires the installation of costly infrastructure, I analyze the intensive and extensive margin of cellphone diffusion separately. Estimating a two-part model for 30 developed and 89 developing countries between 1985 and 2010, I find similar effects for both country groups: First, FDI accelerates cellphone usage along both the intensive and extensive margin, while the effect of trade is insignificant. Second, I establish a positive link between cellphone usage and migration along the intensive margin. However, this effect is muted by the migration of high skilled workers relative to low skilled workers. Evaluating the overall effect of migration at the mean indicates that the Brain Drain, in fact, more than offsets the positive spillovers from migration. Sensitivity analysis along several dimensions underline the robustness of these results.

Keywords: Technology Diffusion, Migration, International Trade, FDI

JEL Classification: F1, F2, O1, O3