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Global knowledge and trade flows: Theory and measurement

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  • Lind, Nelson
  • Ramondo, Natalia

Abstract

We present a model of trade, global innovation, and diffusion, inspired by Eaton and Kortum (1999). The specific structure for innovation and diffusion we propose, which leverages general results developed in our previous work (Lind and Ramondo, 2023a), allows us to measure the flow of ideas across countries and over time. By deriving tractable expressions for productivity and expenditure, we can use easily-available international trade data to estimate both innovation and diffusion rates across countries and over time. We find that, although innovation is correlated with economic growth, there are many high income countries that primarily produce using diffused ideas from foreign sources.

Suggested Citation

  • Lind, Nelson & Ramondo, Natalia, 2024. "Global knowledge and trade flows: Theory and measurement," Journal of International Economics, Elsevier, vol. 151(C).
    • Handle: RePEc:eee:inecon:v:151:y:2024:i:c:s0022199624000874
    DOI: 10.1016/j.jinteco.2024.103960
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    More about this item

    Keywords

    Innovation; Diffusion; International trade; Poisson processes; Fréchet distribution; Generalized extreme value;
    All these keywords.

    JEL classification:

    • F1 - International Economics - - Trade
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity

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