Technology Spillovers and Trade:Empirical Evidence for the G7 Industrial Countries

The paper tests a model of trade in manufacturing products of major G7 countries for the period 1974-1990. Earlier studies demonstrated that market shares are a function of relative export prices (unit export values) and a proxy for the comparative technological advantage (share of international R&D expenditures or patent counts). The present paper extends this approach by including an indicator of R&D spillovers in addition to direct R&D expenditures and other variables. The indicator for inter-industry flows of R&D spillovers is based on input-output matrices of patents using cross-classification of Canadian patents (PATDAT) according to the most likely 2 digit SIC industry of manufacture and use of the patented invention. The preliminary results suggest that technology spillovers received by an exporting country industry (sector) are rarely a significant determinant of its share of EEC imports.