The channels of technological diffusion across countries

This paper examines the channels of technological diffusion across a wide range of countries. The sample consists of 92 countries over the period 1960 – 2003. To overcome problems of the existing literature, the CHAT dataset was used. The CHAT dataset directly measures technological diffusion and both include the extensive and intensive margin. A total of 18 technologies are transformed to compute an average time lag which indicates the backwardness of a country with respect to the technological leader. The econometric approach adopted is the Fixed Effect estimator, but also an Instrumental Variable approach to deal with endogeneity. The channels for developing and developed countries differ. For developing countries, FDI and migration are a robust channel for technological diffusion. For developed countries, FDI is the only robust channel. Although the results also suggest education is an important channel for developed countries, this result is not present in the Instrumental Variable approach. Future research is necessary to check the robustness of the results as there are yet only a few research papers that incorporate the CHAT dataset.