Spatial Dependence of Technology Spillovers among Trading Partners

Fadi Fawaz and Mashaallah Rahnama Moghadam ()
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Fadi Fawaz: Department of Economics, Jamestown College, Jamestown, ND, USA
Mashaallah Rahnama Moghadam: Texas Tech University, Lubbock, TX, USA

Global Economy Journal (GEJ), 2013, vol. 13, issue 1, 47-62

Abstract: Previous literature suggests that trade contributes to knowledge and technology spillovers among trading partners. Using panel data and country-specific fixed effects, we show that the technology of a country is explained by existing technology of its major trading partners. We build an endogenous growth model for OECD countries for the 1960–2010 period; we draw the residuals to measure the Total Factor Productivity (TFP) of each country. Then, using spatial econometrics, we regress the TFP of each country on previous TFP of its major trading partners. In addition, we run a Random Coefficient Model, to let this relationship vary randomly by country. Finally, we run the endogenous growth model again, but now it includes the spatial lag term as an explanatory variable.

Keywords: trade; economic growth; spatial econometrics; random coefficient models (search for similar items in EconPapers)
Date: 2013
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DOI: 10.1515/GEJ-2012-0031

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