On "Indirect" Trade-Related Research and Development Spillovers
29 Pages Posted: 20 Apr 2016
Date Written: April 2001
Trade does matter for the international transmission of knowledge. And the indirect trade-related transmission of knowledge is at least as important as its direct transmission.
An influential literature argues that trade promotes the flow of knowledge and the transmission of technology between trading partners. This literature tends to focus on "direct" spillovers related to the levels of research and development (R&D) produced by the trading partners.
Lumenga-Neso, Olarreaga, and Schiff argue that "indirect" trade-related R&D spillovers also take place between countries even if they do not trade with each other. These indirect spillovers are associated with available (rather than produced) levels of R&D. If Country A imports from Country B and Country B imports from Country C, C could transmit knowledge to Country A even if A does not trade directly with Country C.
The authors' empirical results suggest that these indirect trade-related spillovers are at least as important as the direct spillovers and may be more so. The results strengthen the view that trade matters in the international transmission of R&D.
The results also suggest that the existence of these indirect effects reduces the importance of bilateral trade patterns as determinants of the level of foreign R&D spillovers through trade.
This paper - a product of Trade, Development Research Group - is part of a larger effort in the group to understand the relationship between openness and growth. Copies of the paper are available free from the World Bank, 1818 H Street NW, Washington, DC 20433. The authors may be contacted at email@example.com, firstname.lastname@example.org, or email@example.com.
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