Why some countries are slow in acquiring new technologies? A model of trade-led diffusion and absorption

Abstract

Drawing on the stylized facts and evidences, in a computable general equilibrium (CGE) model, this paper examines the impact on TFP of North–South, North–North trade-related triangular R&D spillovers. By constructing different technology appropriation parameters based on embodied and disembodied R&D, absorption and learning effects, it shows: (i) North–South R&D flows have a positive impact on TFP; (ii) human capital-induced skill facilitates North–South R&D flows; (iii) socio-institutional and technology adoption parameters do play roles for knowledge flows, its capture, and transmission. Such technology diffusion and assimilation counters the adverse impact of North–South geographical distance on productivity dynamics.