Technological diffusion, trade patterns and growth

Abstract

In recent years economic research has explored further the role of technology within the process of economic development both from a theoretical and from an empirical point of view. New growth theory has attempted to frame, within a formal model, the determinants of technological progress and the form of its impact on productivity. In the new approach, a series of different factors are able to influence directly countries* growth rates, for example particular policy choices, or countries* interaction with the international environment. Together with theoretical developments, empirical research has attempted to evaluate of the size of the impact of a set of variables, which represent technological progress, political choices, and the extent of interactions with the international environment on cross country growth performances. An interesting aspect of new growth theory is that international knowledge spillovers and technological diffusion have a direct impact on growth rates of the receiving country. The first part of this research (Part A) concerns the theory of what motivates open economies to assimilate technology and to compete in the international markets. The theory is used to predict the effects of such behaviour on long run rates of growth. The second part (Part B) empirically evaluates the magnitude of the impact of technological diffusion and technological assimilation as represented by alternative technological variables, on growth rates on a panel sample of countries.