Weightless Machines and Costless Knowledge: An Empirical Analysis of Trade and Technology Diffusion

CEPR Discussion Paper No. 3321

36 Pages Posted: 16 May 2002

See all articles by Giorgio Barba Navaretti

Giorgio Barba Navaretti

University of Milan - Department of Economics, Management and Quantitative Methods (DEMM); University of Milan - Centro Studi Luca d'Agliano (LdA)

Isidro Soloaga

Universidad Iberoamericana Ciudad de México

Multiple version iconThere are 2 versions of this paper

Date Written: April 2002

Abstract

This Paper examines the impact of imported technologies on productivity for a sample of developing and transition countries in Central and Eastern Europe and in the Southern Mediterranean. These economies are getting more and more integrated to the European Union. The Paper departs from earlier studies of international technology diffusion as it focuses on the technology embodied in the machines imported. Earlier works had mostly focussed on spillovers of foreign R&D conveyed through trade, without controlling for the characteristics of the goods imported. The Paper jointly estimates the choice of foreign technology and its impact on domestic productivity for a set of manufacturing sectors. The technological level of the machines imported is proxied by an index relating the unit value of the machines imported by a given country to the unit value of the same machines imported by the US. The Paper finds a constant and even increasing gap between the unit value of the machines imported by the US and the machines imported by our sample of developing countries. It shows that this gap is significantly persistent and that it is higher the lower the level of GDP of the importing country. The empirical analysis also finds that productivity growth in manufacturing depends positively on the type of machines imported in a given industry. Consequently, although the choice of developing countries to buy cheaper and less sophisticated machines is optimal, given relative factor prices and their endowments of technology, this choice has a cost in terms of long-run productivity growth.

Keywords: Trade integration, import of technology, productivity growth

JEL Classification: F15, F21, O10, O14, O33

Suggested Citation

Barba Navaretti, Giorgio and Soloaga, Isidro, Weightless Machines and Costless Knowledge: An Empirical Analysis of Trade and Technology Diffusion (April 2002). CEPR Discussion Paper No. 3321, Available at SSRN: https://ssrn.com/abstract=312443

Giorgio Barba Navaretti (Contact Author)

University of Milan - Department of Economics, Management and Quantitative Methods (DEMM) ( email )

Via Conservatorio, 7
Milan, 20122
Italy
+390250321521 (Phone)

University of Milan - Centro Studi Luca d'Agliano (LdA) ( email )

Via Donizzatti 38
Milano, Mi 20122
Italy
+39 02 36683850 (Phone)

Isidro Soloaga

Universidad Iberoamericana Ciudad de México ( email )

United States

HOME PAGE: http://www.iberoeconomia.mx\IsidroSoloaga

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