North-south trade-related technology diffusion : virtuous growth cycles in Latin America, Vol. 1 of 1

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North-south trade-related technology diffusion : virtuous growth cycles in Latin America

Author:	Schiff, Maurice; Wang, Yanling;	Collection Title:	Policy Research working paper ; no. WPS 5300
Country:	Latin America;	Date Stored:	2010/05/10
Document Date:	2010/05/01	Document Type:	Policy Research Working Paper
Language:	English	Region:	Latin America & Caribbean
Report Number:	WPS5300	SubTopics:	Governance Indicators; Research and Development; Rural Development Knowledge & Information Systems; E-Business; Agricultural Knowledge and Information Systems
Volume No:	1 of 1

Summary: This paper examines the impact on total factor productivity in Latin America and the Caribbean (LAC) and in other developing countries of trade-related technology diffusion from the North) (denoted by NRD), education, and governance, research and development The NRD value for a developing country is an average of R&D stocks in the North, with weights related to openness with the North. Industry-specific NRD is based on the Northﾒs industry-specific R&D, North-South trade patterns, and input-output relations in the South. The main findings are: i) the impact of education and governance on TFP is significantly larger in LAC than in other developing countries, while the opposite holds for NRD; and ii) education, governance and NRD have additional effects on TFP in LACﾒs R&D-intensive industries through their interaction with either or both of the other two variables; and iii) since NRD increases with openness and with R&D in the North, both variables raise the South's TFP directly as well as through their interaction with education and governance. These interaction effects imply that increasing the level of any of the three policy variables -- education, governance, or openness --results in virtuous growth cycles. These are smallest under an increase in one of these variables, stronger under an increase in two of them and strongest under an increase in all three variables.


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