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North–South Trade-Related Technology Diffusion and the East Asia–Latin America Productivity Gap

Published online by Cambridge University Press:  05 September 2023

Maurice Schiff  and
Yanling Wang
Maurice Schiff*
Affiliation:
IZA Institute of Labor Economics, 3299 K Street, NW, Washington, DC 20007, USA
Yanling Wang
Affiliation:
Norman Paterson School of International Affairs, Carleton University, 5306 River Building, 1125 Colonel-By-Drive, Ottawa, Ontario, Canada K1S 5B6
*
Corresponding author: Maurice Shiff, Email: schiffmauricewilly@gmail.com
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Abstract

This paper examines the impact of trade-related technology diffusion from G7 countries to Latin America and East Asia on total factor productivity controlling for education, governance, and distance. We build on the trade and distance-focused strands of the technology diffusion literature and find that (i) total factor productivity (TFP) increases with education, trade, and governance (ETG) and declines with distance to the G7 countries; (ii) increasing Latin America's ETG to East Asia's level would double TFP, accounting for about 75% of the TFP gap between the two country groups; and (iii) South America's greater remoteness relative to Mexico's from the US and Canada significantly reduces its TFP and similarly for Singapore's greater remoteness from Japan relative to Hong Kong.

Keywords

F10O19O33O40North–South tradetechnology diffusionEast AsiaLatin AmericaproductivityTFPdistance
Type
Original Article
Information
World Trade Review , Volume 22 , Special Issue 3-4: Double Special Issue: Trade Policy, Openness, and Development in Honour of L. Alan Winters , October 2023 , pp. 348 - 358
Copyright
Copyright © The Author(s), 2023. Published by Cambridge University Press on behalf of The World Trade Organization

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