Regional Integration and Technology Diffusion : The Case of the North America Free Trade Agreement
The literature on regional integration agreements (RIAs) is vast and deals with political, economic, and political economy issues. The literature on the economics of RIAs deals mostly with static effects, and concludes that these effects are, in ge...
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| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2014
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2003/09/2516828/regional-integration-technology-diffusion-case-north-america-free-trade-agreement http://hdl.handle.net/10986/18110 |
| Summary: | The literature on regional integration
agreements (RIAs) is vast and deals with political,
economic, and political economy issues. The literature on
the economics of RIAs deals mostly with static effects, and
concludes that these effects are, in general, ambiguous. So
far there has been no empirical analysis of the dynamic
effects of RIAs based on their impact on technology
diffusion from partner and nonpartner countries. Schiff and
Wang's paper is a first attempt in this direction. The
authors examine the impact of the North America Free Trade
Agreement (NAFTA) on total factor productivity in Mexico
through its impact on trade-related technology transfers
from OECD countries. They estimate trade-related technology
diffusion by using a measure of trade-related foreign
research and development (R&D). Foreign R&D is
constructed based on industry-specific R&D in the OECD,
OECD-Mexico trade patterns, and input-output relations in
Mexico. The authors find that: Mexico's trade with its
NAFTA partners had a large and significant impact on
Mexico's total factor productivity, while trade with
the rest of the OECD did not. Simulating the impact of NAFTA
has led to a permanent increase in total factor productivity
in Mexico's manufacturing sector of between 5.5 percent
and 7.5 percent and to some convergence with the economies
of Canada and the United States. |
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