Working Papers

Geography, International Trade and Technological Diffusion




October, 2002


F. International Economics

International trade has been considered as a mechanism for knowledge diffusion that offers the opportunity to improve technological capabilities of importing countries. By importing capital goods from developed countries, developing countries could achieve their economic development despite their insufficient investments in technology. Many studies dealing with this subject provide strong empirical evidence of technological externalities contributing to the economic openness of these countries. In this paper, we suppose first that, regardless of prices and policy tariffs, imports could also be explained by geographic factors. We try to explain the intensity of knowledge diffusion by the geographic location of importing countries with regard to their trading partners. Under the hypothesis that the knowledge diffused has the characteristic of a public good, our estimations show that importing from the nearest G6 countries allows more knowledge spillovers for some developing countries, however we conclude that geographic location of importing countries is not the only factor that determines the intensity of technological diffusion. Knowledge spillovers also depend on the evolution of the geographic structure of imports for these countries and on the kind of goods they import (knowledge intensive or not).