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MAJOR WORKS:
International Trade, Technology Diffusion, and the Role of Diffusion Barriers
Abstract:
This paper assesses the welfare impact of trade and technology diffusion as well as the change in the cross-country distribution of GDP due to removal of trade costs and diffusion barriers. The model extends the multi-country Ricardian trade model of Alvarez and Lucas (2007) to include technology diffusion with diffusion barriers. A key feature of the model is that some countries export goods produced by foreign technology via diffusion. The model is calibrated to match the world GDP distribution, the merchandise trade and technology diffusion shares of GDP, and real GDP per capita for a sample of 31 countries. Data on international trade in royalties, license fees, and information intensive services are used as proxies for international technology diffusion. There are three key findings. First, the welfare gains from removing diffusion barriers are 4--60% across countries, generally larger than the gains from removing trade costs (8--40%). The main reason is that diffusion has a larger impact on the nontradable sector due to the substitutability between trade and diffusion in the tradable sector. Another reason is that diffusion barriers are generally larger than trade costs. Second, removing trade costs and diffusion barriers has little impact on reducing the dispersion of real GDP per capita (measured by Gini index) across countries. Compared to the benchmark, free diffusion decreases the Gini by 4%, and free trade decreases the Gini by 2%. Third, removing diffusion barriers increases trade, which indicates that diffusion may enhance trade.
(Earlier version available as CESifo Working Paper Series No. 2625)
Abstract:
This paper uses a gravity framework to investigate the effects of distance as well as subnational and national borders in knowledge spillovers. Drawing on the NBER Patent Citations Database, I construct a data set to examine patent citations data at the metropolitan level within the U.S. as well as the 38 largest patent-cited countries outside the U.S. Three key findings are documented. First, we find strong subnational localization effects at the Metropolitan Statistical Area and state levels: more than 90% of intranational border effects stem from the metropolitan level rather than state. This is consistent with the artifact of geographic aggregation at the state level for trade flows as in Hillberry and Hummels (2008). Second, border and distance effects decrease with the age of cited patent, which implies that new knowledge faces the largest barriers to diffusion. However, over time, the measured effects of border and distance increased due to two potential reasons: the increased proportion of new knowledge flows and the increased proportion of self-citations over time. Finally, we find that (assignee) self-citations and aggregation bias are two sources of overestimated aggregate border effects of knowledge spillovers. While self-citations are only 11% of total citations, they account for approximately 50% of MSA and national border effects. Decomposing the data along geographic, age or industrial dimensions contributes to the reduction of border effects.
OTHER WORKS:
The Higher Educational Transformation of China and Its Global Implications
joint with John Whalley, Shunming Zhang, and Xiliang Zhao, The World Economy, revise and resubmit 2010.(Earlier version available as NBER Working Paper No. 13849, March 2008.)
Abstract:
This paper documents the major transformation of higher education that has been underway in China since 1999 and evaluates its potential global impacts. Reflecting China's commitment to continued high growth, this transformation focuses on major new resource commitments to tertiary education and significant changes in organizational form. All of these changes have already had large impacts on China's higher educational system and are beginning to be felt by the global educational structure. There are also implications for global trade both directly in ideas, and in idea derived products. This focus on tertiary education differentiates the Chinese case from other countries who instead stressed primary and secondary education at similar stages of development.(Related articlel based on this paper on VoxEU.org)
(Related article and comments on this paper by Alex Tabarrok. Bloged by Marginal Revolution)
Approaches to Fostering Productivity Growth in Brazil, China and India
joint with Manmohan Agarwal and John Whalley, CIGI Working Paper No. 47, April 2010 (under review).Abstract:
Productivity growth is a significant contributor to GDP growth, particularly to increases in per capita income. However, there is considerable ambiguity regarding how to measure the concept of technical progress, and consequently on policies that would foster productivity growth. Brazil, China and India, three important emerging economies, are seeking to foster productivity growth through encouraging innovation and technology transfers from the more developed economies. But given the ambiguities about how to encourage innovation and technology transfers, governments in these countries adopted a plethora of policies in the hope that the combination will be effective. This ambiguity can also be seen in the much slower growth of productivity in Brazil than China, even though Brazil has scored higher on the World Bank's Knowledge Assessment Methodology.A common trend is to foster closer links between universities and research institutes and commercial enterprises. Chinese policy has been most forward in this respect. While such a link was behind the government's thinking in India, until recently the link was weak and new policies have been adopted by the government since the 1991 economic reforms to strengthen the relationship. In Brazil the link had been very weak until a few years back when the government instituted new policies to encourage the commercialization of new technologies.