Trade in Knowledge Technologies
In 2005, according to statistics of International Monetary Fund (IMF), the output of the emerging countries exceeds half of the world’s total output. As stated by the World Trade Organization (WTO), the liberalization in trade and investment regimes has played a central role in this expansion (WTO, 2003).
Since neo-classical theory predicts that a higher rate of growth and wealth will result from a decrease in trade barriers and tariffs, openness implies higher productivity. The acknowledgement of international trade as one of the main channels of growth goes back to series of pioneering economists.More recently, endogenous growth theory predicts that growth rates of countries are related through international trade linkages and associated embodied and disembodied knowledge spillovers, i.e. knowledge externalities (Grossman & Helpman, 1991). Knowledge is inherently non-rival in its use, and hence its creation and diffusion are likely to lead spillovers and increasing returns. It is this non-rival property of knowledge that is at the heart of the theoretical models that predict endogenous growth from research and development (R&D) investments as in Romer (1990), in Grossman and Helpman (1991) but also in Howitt and Aghion (1998). In this context, the development of a country depends heavily on its knowledge capital, which in turn is determined by the rate of national innovation and international technology diffusion.
1.5.