Working Paper: CEPR ID: DP2871
Authors: Olivier Lumenga-Neso; Marcelo Olarreaga; Maurice Schiff
Abstract: An influential literature argues that trade promotes knowledge flows and technology transmission between trading partners. This literature focuses on ?direct? R&D spillovers which are related to the levels of R&D produced by the trading partners. In this paper we 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 with produced levels of R&D. Our empirical results suggest that these ?indirect? trade-related spillovers are at least as important as the ?direct? ones, and strengthen the view that trade does matter for the international transmission of R&D. They also suggest that, due to the existence of these ?indirect? effects, bilateral trade patterns are relatively less important as determinants of the level of foreign R&D spillovers acquired through trade.
Keywords: direct and indirect foreign R&D spillovers
JEL Codes: C23; F01; O30; O47
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Indirect trade-related R&D spillovers (O39) | Total Factor Productivity (TFP) (D24) |
| Direct trade-related R&D spillovers (O39) | Total Factor Productivity (TFP) (D24) |
| Indirect trade-related R&D spillovers (O39) | Direct trade-related R&D spillovers (O39) |
| Total foreign R&D stock (O39) | Indirect trade-related R&D spillovers (O39) |
| Trade patterns (F10) | Total foreign R&D stock (O39) |
| Direct R&D stocks (O32) | Total Factor Productivity (TFP) (D24) |
| Indirect R&D stocks (O32) | Total Factor Productivity (TFP) (D24) |