Productivity growth and technical progress are closely related phenomena. Moreover, technical progress in one location frequently goes hand in hand with productivity growth elsewhere, partly because technological knowledge is non-rival. Technology diffusion is the process by which R&D in one industry benefits productivity in another industry, and R&D in one country increases the productivity in another country. Recent research in growth theory holds that economic integration at the industry as well as at the country level facilitates technology diffusion and the spatial distribution of productivity growth. This project seeks to quantify the contribution of economic integration to technology diffusion and productivity growth and to distinguish different channels through which it does so. The results from this research will have implications for economic policies towards science and technology, trade, and international investment, which have a considerable impact on welfare due to the relationship between productivity and economic well-being.
