Technology Spillovers Through International Trade

The Endogenous growth literature has stimulated empirical research into links between trade and growth in general and international technology spillovers in particular. As a consequence, numerous papers to exploit the new trends of the new growth theories have started to emerge in a seemingly endless stream.The literature has investigated almost technology diffusion across the developed economies. A number of researchers have found that foreign sources of technology are an important contributor to productivity growth for the developed economies. A very little research however has been carried out on the magnitude and significance of international technology diffusion for the countries with low and middle incomes. Those studies too could find spillover effects to developing countries and have found that the trade is important in facilitating such technology spillovers.The expectation of the present paper is that developing world are most likely to gain access to knowledge through their trade with the developed world, given that R&D is concentrated in a small number of developed countries. Through a long history developing economies have been in unequal integration with the world economy. But the combined impact of today's world globalization and the broad spread of knowledge and technologies have significantly changed the forms of integration and have set a new course of important implications for development strategies. As a result, developing countries have faced with new challenges and tasks. Therefore the model that was tested in the paper is very characteristic and applicable to developing countries that one may draw some important suggestions and conclusions from it.The main purpose of the paper is to test the possibility and the extent of technology spillover, especially in Armenia and China, for two developing and same time transitional economies, that studies on this topic have been very rare. For the sample of China, the technology spillover effect is found to be much stronger and quicker than in case with Armenia. The reasons laid under the received different results were directly concerned with transition policies of China and Armenia, since the period studied of both economies in the model was subject to transitional reforms and restructuring.