Trade-Related Technology Diffusion and the Dynamics of North-South and South-South Integration

Abstract

This paper examines the impact on total
\n factor productivity of North-South and South-South
\n trade-related research and development (R&D) spillovers.
\n It is the first to do so at the industry level for
\n developing countries. North-South and South-South R&D
\n flows are constructed based on industry-specific R&D in
\n the North, North-South and South-South trade patterns, and
\n input-output relations in the South. The main findings are:
\n 1) North-South and South-South R&D flows have a positive
\n impact on total factor productivity, though the former is
\n larger. 2) R&D-intensive industries benefit mainly from
\n North-South R&D flows while low R&D-intensive
\n industries benefit mainly from South-South R&D flows.
\n These results have implications for dynamic comparative
\n advantage and for the dynamics of North-South and
\n South-South regional integration.