The next RITM Economics Seminar will take place on Monday 16 November, Online, from 11:00 to 12:00. Igor Bagayev (Université Paris-Est Créteil) will present “Innovation and Technological Content of Imports” with Ron B. Davies and Dieter F. Kogler ).
Trade is a recognized conduit for positive international innovation spillovers. Traditionally, three explanations have been given for this: diffusion (exposure to new ideas), import competition, and importing intermediates. The existing literature has focused on the latter two in part because of the difficulty in measuring the technological content of imports and thus the diffusion effect. We overcome this by using the product-technology correspondence of Lybbert and Zolas (2014). Doing so reveals a robust, positive innovation spillover driven by diffusion. Further, controlling for this reveals biases in estimates of the other two channels with our results pointing towards a negative effect of import competition and an insignificant one for imported inputs. Nevertheless, the net effect of increased openness to imports is positive. Beyond trade, we find a positive effect from international research collaboration. Together, these suggest that the current push towards isolationism in government policies may have a significant dampening effect on technological growth.