This paper examines the impact of trade with Japan, North America and the EU on technology diffusion and TFP growth in Jordan, Korea and Mexico. The measures of foreign R&D are constructed on the basis of industry-specific R&D in the North, North-South trade patterns, and input-output relations in the South. We show that technology diffusion and productivity gains tend to be regional: Jordan (Korea) (Mexico) benefits mainly from trade with the EU (Japan) (North America). In other words, the dynamic version of the "natural trading partners" hypothesis seems to hold for these countries.

El Trimestre Economico
Norman Paterson School of International Affairs

Schiff, M. (Maurice), & Wang, Y. (2009). Dimensión regional de las externalidades indirectas de la investigación y desarrollo relacionadas con el comercio internacional norte-sur. El Trimestre Economico, 76(1), 265–277.