Trade Patterns and International Technology Spillovers:Theory and Evidence from Patent Citations

Naoto Jinji, Xingyuan Zhang and Shoji Haruna

Discussion papers from Graduate School of Economics Project Center, Kyoto University

Abstract: In this paper, we develop a two-country model of monopolistic competition with quality differentiation by extending the model of Melitz and Ottaviano (2008) and examine the relationship between the bilateral trade structure and international technology spillovers. We show that bilateral trade patterns and the extent of technology spillovers will change, depending on the technology gap between two countries. We then test predictions of the model by using bilateral trade data among 44 countries and patent citation data at the U.S., European, and Japanese Patent Offices. We use patent citations as a proxy for spillovers of technological knowledge. Trade patterns are categorized into three types: one-way trade (OWT), horizontal intra-industry trade (HIIT), and vertical intra-industry trade (VIIT). Each of OWT and VIIT is further divided into two subcategories, based on the direction of trade. We find that intra-industry trade plays a significant role in technology spillovers. In particular, HIIT is associated with larger technology spillovers than VIIT, which confirms the predictions of the model.

Keywords: technology spillovers; patent citations; intra-industry trade; firm heterogeneity (search for similar items in EconPapers)
JEL-codes: F12 O31 O33 (search for similar items in EconPapers)
Pages: 38 pages
Date: 2010-10, Revised 2011-03
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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