The dual nature of trade: Measuring its impact on imitation and growth

Imports embodying foreign technology raise output directly as inputs into production and indirectly through reverse engineering. This paper quantifies spillovers from high technology imports to domestic imitation and innovation in developed and developing countries. It then considers the contribution of foreign and domestic innovation to growth in per capita GDR Patent data from 1965 to 1990 for 75 countries are used to create proxies for imitation and innovation. High technology imports positively affect domestic imitation and innovation. Moreover, their role is greater in developing nations. Finally, foreign technology embodied in imports plays a greater role in growth than domestic technology. (C) 2003 Elsevier Science B.V. All rights reserved.