Working Paper No. 03-17

Productivity Spillovers and Economic Growth--Was East Asia Unique?
Kazuhiko Yokota
November 2003

ABSTRACT

Recent empirical studies on international R&D spillovers have shown that technology diffusion across countries raises productivity and, hence, boosts economic growth. However, these studies do not explain how technological knowledge accumulated in the tradable sector can be transferred to the rest of the economy. This paper answers this question by focusing on the aspect of externalities between the tradable and non-tradable sectors. The second purpose of this paper is to test for the statistical similarity of East Asian countries. In so doing, we modify the multi-sector framework and estimate the reduced forms using pooled data comprised of 51 countries over 24 years. Empirical results clearly show that some Asian countries can be regarded as one group in terms of the magnitude of the productivity spillover effect. We find statistical differences in the estimated parameters between East Asian countries, developed countries, and developing countries, with the East Asian countries showing the highest spillover effects.

JEL classification: F43; O41; O53; O57
Keywords: Multi-sector model; Spillover; Growth; East Asia; Externality

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