TradeRelated Technology Diffusion and the Dynamics of NorthSouth Integration. World Bank.pdf

TRADE-RELATED TECHNOLOGY DIFFUSION AND THE DYNAMICS OF NORTH-SOUTH AND SOUTH-SOUTH INTEGRATION* Maurice Schiff, Yanling Wang, and Marcelo Olarreaga World Bank Abstract This paper examines the impact on TFP of North-South and South-South trade- related RD spillovers. It is the first, as far as we know, to do so at the industry level for developing countries. North-South and South-South RD flows are constructed based on industry-specific RD in the North, North-South and South-South trade patterns, and input-output relations in the South. The main findings are: i) North-South and South- South RD flows have a positive impact on TFP, though the former is larger; and ii) RD-intensive industries benefit mainly from North-South RD flows while low RD- intensity industries benefit mainly from South-South RD flows. These results have implications for dynamic comparative advantage and for the dynamics of North-South and South-South regional integration. World Bank Policy Research Working Paper 2861, June 2002 The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the view of the World Bank, its Executive Directors, or the countries they represent. Policy Research Working Papers are available online at . * We would like to thank Caroline Freund, and s