This paper surveys what is known about the extent of international technology diffusion and channels through which technology spreads. Productivity differences explain much of the variation in incomes across countries, and technology plays a key role in determining productivity. The pattern of worldwide technical change is determined largely by international technology diffusion because a few rich countries account for most of the world's creation of new technology. Cross-country income convergence turns on whether technology diffusion is global or local. There is no indication that international diffusion is inevitable or automatic, but rather, domestic technology investments are necessary. Better understanding of what determines the effectiveness of technology diffusion sheds light on the pace at which the world's technology frontier may expand.

Convergence in per capita income across countries turns on whether technological knowledge spifiover are global or local. This paper estimates the amount of spifiover from R&D expenditures in major industrialized countries on a geographic basis. A new data set is used which encompasses most of the world's innovative activity at the industry-level between the years 1970 and 1995. First, I find that technological knowledge is to a substantial degree local, not global, as the benefits from foreign spifiover are declining with distance: on average, a 10% higher distance to a major technology-producing country such as the U.S. is associated with a 0.15% lower level of productivity. Second, technological knowledge has become more global over the sample period. As a determinant of productivity, foreign R&D has significantly gained in importance relative to domestic R&D, and the extent to which knowledge spifiover decline with distance has fallen by 20%. The finding of a falling but still high degree of localization has important implications for macroeconomics and growth, trade, and regional economics. could be to some extent local. Helsinki, for instance, is located about 1,500 miles away from Bonn, around 6,900 miles from Washington, D.C., and 7,800 miles from Tokyo, while the distance from Canberra to Bonn, Washington, and Tokyo is 16,500, 16,000, and 8,000 miles, respectively. If knowledge spillover are local, then productivity in Finland should, ceteris paribus, be lower than in Australia, because the former is closer than the latter to Germany, the U.S., and Japan, the three countries that account for more than 75% of the world's spending on research and development (R&D). WolfgangI will investigate whether knowledge spillover are global or local by examining whether the distance between countries affects the magnitude of productivity gains from each others' R&D spending.Geographic distance should not matter for international technology diffusion if there is a global pool of technological knowledge or a country's technology level depends only on idiosyncratic non-spatial 'These points are emphasized by Mankiw (1995) and Prescott (1998), respectively.

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Standard-Nutzungsbedingungen: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden. Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen. Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Abstract We estimate international technology spillovers to U.S. manufacturing firms via imports and foreign direct investment (FDI) between the years of 1987 and 1996. In contrast to earlier work, our results suggest that FDI leads to substantial productivity gains for domestic firms. The size of FDI spillovers is economically important, accounting for about 11% of productivity growth in U.S. firms between 1987 and 1996. In addition, there is some evidence for imports-related spillovers, but it is weaker than for FDI. The paper also gives a detailed account of why our study leads to results different from those found in previous work. This analysis indicates that our results are likely to generalize to other countries and periods.

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