Impact of Free Trade on Technological Heterogeneity across Countries: The Case of OECD European Members

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Karimi, Mohsen | 2009

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Type of Document: M.Sc. Thesis
Language: Farsi
Document No: 39664 (44)
University: Sharif University of Technology
Department: Management and Economics
Advisor(s): Abedini, Javad
Abstract:
Although technological specialization has been recognized as a stimulating factor of international trade (Ricardian theory), new approaches emphasize the endogeneity of technological heterogeneity across countries. Following them, we proceed to examine the effect of free trade on technological differences among 20 OECD members during 1996-2008. We first use the model of Eaton and Kortum (2002) to obtain an annual estimate of technological heterogeneity within the OECD group. We then analyze the behavior of this index facing international trade statistics in the same period. The results show that the OECD countries have been experienced a technological convergence, thanks to a boost in the inter-group trade as well as FDI flows and some other exchanges such as knowledge-spillover. The results have been verified through another method. In addition, an application of the Granger test confirms the causality direction from trade to technological changes
Keywords:
Trade ; Total Factor Productivity (TFP) ; Technological Spillover ; Technology Hetero geneity ; Specialization

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