DO POTENTIAL TECHNOLOGICAL SPILLOVERS MATTER FOR HOW TRADE RESTRICTIONS OR OPENNESS AFFECT ECONOMIC GROWTH?

In this paper we investigate if trade barriers or openness affect economic growth differently in the presence of technological diffusion. A sample of about 70 developing countries is chosen and the impact of import tariffs and SW openness index on economic growth when these countries engage in technology diffusing trade is studied. The results indicate that two measures of technological diffusion namely machinery and transport equipment and manufactured imports, have a positive and significant impact on how trade openness affects growth. The impact of trade barriers is generally not significant.