Innovation, Technology Transfer and International Trade

Abstract

The interaction of technological innovation and international trade is one of the most interesting issues to both theoretical and empirical economists. In the area of macroeconomics, the recent development of endogenous growth theory, in which technological innovation is a key-element, is closely related to international trade. The purpose of this paper is to survey the recent theoretical and empirical literature of technological innovation, technology transfer and international trade. After the introduction, the effect of exogenous technological innovation on the pattern of international trade is discussed in the second section. In the third section, how the stock of technological knowledge generated through “learning by doing” changes the comparative advantage is examined. In the fourth section, the paper introduces the theoretical argument on how the technological knowledge created by R&D in the North and transferred to the South accelerates the economic growth of both sides. The last section surveys the recent literature of empirical studies of innovation and trade.