Geopolitical Frictions and Technology Transfers: Theory and Empirics

Oscar Camacho (), Michelle Garfinkel, Constantinos Syropoulos () and Yoto Yotov
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Oscar Camacho: The Brattle Group

No 202535, Working Papers from Center for Global Policy Analysis, LeBow College of Business, Drexel University

Abstract: How do geopolitical frictions matter for the diffusion of technology? Based on a guns-versus-butter model involving two countries (a technology leader and a technology laggard), we study the direct and indirect effects dual-use (or general-purpose) technology transfers on the countries' payoffs and hence their preferences over such transfers. A central finding is that, when the initial technological distance between the two countries is large whereas the degree of output security is low and the laggard's capacity to absorb state-of-the-art technologies is relatively limited, the leader has an incentive to block a transfer to the laggard. The analysis also unveils the possible emergence of a "low-technology trap."" Using data on cross-border patent flows as a proxy for technology transfers and sanctions as a proxy for conflict over the 1995-2018 period, we present evidence in support of the theory.

Keywords: output insecurity; arming policies; power; sanctions; low-technology trap (search for similar items in EconPapers)
JEL-codes: D30 D74 F51 O33 (search for similar items in EconPapers)
Pages: 51
Date: 2025-09
New Economics Papers: this item is included in nep-eec and nep-tid
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