DP3711 | North-South and South-South Trade-Related Technology Diffusion: An Industry Level Analysis

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This Paper examines the impact on TFP of North-South and South-South trade-related R&D spillovers. It is the first, as far as we know, to do so at the industry level for developing countries. North-South and South-South R&D flows are constructed based on industry-specific R&D in the North, North-South and South-South trade patterns, and input-output relations in the South. The main findings are: i) North-South and South-South R&D flows have a positive impact on TFP, though the former is larger; and ii) R&D-intensive industries benefit mainly from North-South R&D flows while low R&D-intensity industries benefit mainly from South-South R&D flows. These results have implications for the productivity dynamics of North-South and South-South regional integration.