Working Paper: CEPR ID: DP1133
Authors: David T. Coe; Elhanan Helpman; Alexander W. Hoffmaister
Abstract: We examine the extent to which developing countries that do little, if any, research and development themselves benefit from R&D that is performed in the industrial countries. By trading with an industrial country that has large `stocks of knowledge' from its cumulative R&D activities, a developing country can boost its productivity by importing a larger variety of intermediate products and capital equipment embodying foreign knowledge, and by acquiring useful information that would otherwise be costly to obtain. Our empirical results, which are based on observations over the 1971-90 period for 77 developing countries, suggest that R&D spillovers from the industrial countries in the North to the developing countries in the South are substantial.
Keywords: R&D; Trade; Productivity
JEL Codes: 031; 040
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Foreign R&D capital stock (F21) | Total Factor Productivity (TFP) (D24) |
| Openness to trade (F10) | Total Factor Productivity (TFP) (D24) |