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North-South technology diffusion, regional integration, and the dynamics of the natural trading partners hypothesis

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  • Schiff, Maurice
  • Wang, Yanling

Abstract

Based on static analysis, a number of studies argue that forming a regional trade agreement is more likely to raise welfare if member countries are"natural trading partners,"while other studies claim that the opposite is true. Schiff and Wang look at the argument from a dynamic viewpoint by examining the impact of North-South trade on technology diffusion and total factor productivity (TFP) in the South. Specifically, it examines the impact on TFP in the Republic of Korea, Mexico, and Poland of trade with Japan, Canada plus the United States (North America) and the European Union. Using industry-level data, they find that (1) technology diffusion and productivity gains tend to be regional: Korea benefits mainly from trade with Japan, Mexico with the United States, and Poland with the European Union; and (2) though these results suggest that the dynamic version of the"natural trading partners"hypothesis holds for all three countries, careful analysis shows that it holds for Korea and Mexico but not necessarily for Poland.

Suggested Citation

  • Schiff, Maurice & Wang, Yanling, 2004. "North-South technology diffusion, regional integration, and the dynamics of the natural trading partners hypothesis," Policy Research Working Paper Series 3434, The World Bank.
    • Handle: RePEc:wbk:wbrwps:3434
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    References listed on IDEAS

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    1. Lawrence H. Summers, 1991. "Regionalism and the world trading system," Proceedings - Economic Policy Symposium - Jackson Hole, Federal Reserve Bank of Kansas City, pages 295-301.
    2. Mr. David T. Coe & Mr. Willy A Hoffmaister, 1999. "Are There International R&D Spillovers Among Randomly Matched Trade Partners? A Response to Keller," IMF Working Papers 1999/018, International Monetary Fund.
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    5. Keller, Wolfgang, 1998. "Are international R&D spillovers trade-related?: Analyzing spillovers among randomly matched trade partners," European Economic Review, Elsevier, vol. 42(8), pages 1469-1481, September.
    6. Michaely, Michael, 1998. "Partners to a preferential trade agreement: Implications of varying size," Journal of International Economics, Elsevier, vol. 46(1), pages 73-85, October.
    7. Taegi Kim & Changsuh Park, 2003. "R&D, trade, and productivity growth in korean manufacturing," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 139(3), pages 460-483, September.
    8. Lumenga-Neso, Olivier & Olarreaga, Marcelo & Schiff, Maurice, 2005. "On `indirect' trade-related R&D spillovers," European Economic Review, Elsevier, vol. 49(7), pages 1785-1798, October.
    9. Engelbrecht, Hans-Jurgen, 1997. "International R&D spillovers, human capital and productivity in OECD economies: An empirical investigation," European Economic Review, Elsevier, vol. 41(8), pages 1479-1488, August.
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    Cited by:

    1. Park, Gayoung & Dreamson, Neal, 2023. "The heterogeneous effects of human development and good governance on mobile diffusion in the sub-Saharan region: Evidence from panel quantile regression," Technological Forecasting and Social Change, Elsevier, vol. 189(C).
    2. Alberto Behar & Laia Cirera-i-Crivillé, 2013. "Does it Matter Who You Sign With? Comparing the Impacts of North–South and South–South Trade Agreements on Bilateral Trade," Review of International Economics, Wiley Blackwell, vol. 21(4), pages 765-782, September.
    3. Yanling Wang, 2007. "Trade, Human Capital, and Technology Spillovers: an Industry‐level Analysis," Review of International Economics, Wiley Blackwell, vol. 15(2), pages 269-283, May.

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    More about this item

    Keywords

    Trade Policy; Environmental Economics&Policies; Earth Sciences&GIS; Economic Theory&Research; Water and Industry; TF054105-DONOR FUNDED OPERATION ADMINISTRATION FEE INCOME AND EXPENSE ACCOUNT; Environmental Economics&Policies; Economic Theory&Research; Trade and Regional Integration; Trade Policy;
    All these keywords.

    JEL classification:

    • F02 - International Economics - - General - - - International Economic Order and Integration
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F15 - International Economics - - Trade - - - Economic Integration
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • O39 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Other

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