Technological Adaptation, Trade, and Growth

Author: Mr. Alberto Chong and Ms. Luisa Zanforlin

This paper extends Grossman and Helpman's seminal work (1991), and presents an endogenous growth model where innovations created in a high-tech sector may be assimilated or adapted by a low-tech sector. Applying a simple Heckscher-Ohlin framework, the effects of technological diffusion are found to allow a country relatively scarce in human capital to benefit from nondecreasing rates of growth through its low-tech sector. The model is tested by using a dynamic panel data approach (Arellano and Bover, 1995). Results are consistent with the predictions of the model and robust to a broad range of definitions of technological intensity.

Volume/Issue: Volume 2000 Issue 161

Publication date: October 2000

ISBN: 9781451857801

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Topics covered in this book

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Business and Economics , Exports and Imports , Labor , WP , rate of growth , comparative advantage , GMM system estimator , production function , Growth , Assimilation , Technology , Exports , Imitation , Dynamic Panel Data , input-output coefficient , high-tech goods , parent export , export category , Human capital , Estimation techniques , Unskilled labor , East Asia

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Summary

This paper extends Grossman and Helpman’s seminal work (1991), and presents an endogenous growth model where innovations created in a high-tech sector may be assimilated or adapted by a low-tech sector. Applying a simple Heckscher-Ohlin framework, the effects of technological diffusion are found to allow a country relatively scarce in human capital to benefit from nondecreasing rates of growth through its low-tech sector. The model is tested by using a dynamic panel data approach (Arellano and Bover, 1995). Results are consistent with the predictions of the model and robust to a broad range of definitions of technological intensity.