International Technology Diffusion

9309935 Eaton Much of the recent macroeconomic literature seeking to explain international differences in labor productivity and in growth rates assumes severe impediments to international capital mobility but instantaneous international transmission of technology. In contrast, much of the international trade literature has treated technology as imperfectly mobile, and has sought to attribute differences in growth rates and in living standards to differences in available technologies. The purpose of this research is to answer the following questions: (1) What factors determine the rate at which innovations emanate from different countries? (2) To what extent and how rapidly do innovations in particular countries affect productivity elsewhere? (3) How do countries differ in terms of their propensity to absorb innovations from other countries? (4) What are the implications of the answers to the previous questions for long-run growth and productivity differentials? The relationship between technology and international economic growth is one of the central issues in the economics of global change. Future scenarios about the long-run consequences of different environmental policies depend on our understanding of this relationship. Also the emphasis on international capital mobility makes the research relevant to the debate about the significance of investments in national civil infrastructure because one of the principal arguments for investing in civil infrastructure is that it improves U.S. productivity and growth rates relative to other countries. More specifically, the investigators analyze theoretically and econometrically the process of technological innovation at the national level, and the diffusion of technologies across countries. One component of the project is the development of a macroeconomic model of a set of interdependent economies that incorporates technical progress and capital accumulation at the national level as explanations fo r growth, and that allows for varying degrees of international mobility of both capital and technology.l The model is adapted and used for econometric estimation and simulation. Initially the focus will be at the aggregate level, with subsequent work studying the creation and international diffusion of technology within individual industries. The analysis will make use of OECD data on industry- level productivity, R&D expenditures, and scientists and engineers, the Yale-Canada patent data, and national accounts data provided by the World Bank and by Heston and Summers. ***