Technology, trade and growth

This dissertation investigates the process of technological progress in developing countries, in the context of a growth model. Specifically, it focuses on two issues: first, that of technology transfers from industrial countries, and the role that trade plays in these; second, the importance of different factor inputs for technological progress.; The first chapter is an empirical investigation of technological progress in developing countries, based on a growth model with technology diffusion. Evidence is found that developing countries experience a technological catch-up, conditional on their steady states. Trade with the OECD countries appears to enhance the technological catch-up, not only in conditional terms but also in absolute terms. The data reject the hypothesis that technological progress uses final output as an input (one-sector model). R&D activities are highly intensive in human capital and adversely affected by the size of the labor force.; The second and third chapters build on the first chapter, focusing respectively on the role of trade and on the role of factor inputs in technological progress. The second chapter, joint with Dalia Hakura, develops and tests the hypothesis that intra-industry trade is a better channel of technology transfers than inter-industry trade. The conjecture is that countries are likely to absorb foreign technologies more easily when their imports are from the same sectors as their production and exports. The results of empirical tests support strongly this hypothesis.; The third chapter, joint with Elhanan Helpman, provides a model consistent with the empirical observations that R&D activities are highly intensive in human capital and adversely affected by the size of the labor force. In this model, the negative effect of labor requires that the elasticity of substitution between human capital and labor in the final output sector be less than one. It is estimated to be of the order of 0.10–0.15. There is evidence of a residual negative effect of labor, after holding fixed human capital per worker. An extension of the model is suggested that could account for this negative scale effect.