North-South R & D Spillovers

We examine the extent to which developing countries that do little, if any, research and development themselves benefit from R & D that is performed in the industrial countries. By trading with an industrial country that has a large `stock of knowledgé from its cumulative R & D activities, a developing country can boost its productivity by importing a larger variety of intermediate products and capital equipment embodying foreign knowledge, and by acquiring useful information that would otherwise be costly to obtain. Our results, based on data for 77 developing countries, suggest that R & D spillovers from 22 industrial countries over 1971-90 are substantial.