Technology Transfer through Imports

While there is general agreement that technology differences must figure prominently in any successful account of the cross-country income variation, not much is known on the source of these technology differences. This paper examines cross-country income differences in terms of factor accumulation, domestic R&D, and foreign technological spillovers. The empirical analysis encompasses seventeen industrialized countries in four continents over three decades, at a level disaggregated enough to identify innovations in a number of key high-tech sectors. International technology transfer is found to play a crucial part in accounting for income differences. We also relate technology transfer to imports, showing that imports are often a major channel. At the same time, our analysis highlights that international technology transfer varies importantly across industries and countries.