Trade and R&D Externalities : Impact on the Cost of Production of the Tunisian Manufacturing Sector

The purpose of this paper is to introduce a suitable methodology for estimating the extent to which less developed countries — namely Tunisia — that hardly invest in research and development benefit from R&D that is conducted in industrial countries. In this study we use the imports of high-technology products as a proxy for the international spillovers measure and assess their impact on cost of production of the Tunisian manufacturing sector. Estimation results confirm the overall positive effect of trade as a channel of spillovers at the sectoral level. More precisely, imports of high-technology products and equipment enable recipient countries to benefit from foreign R&D. We demonstrated that foreign R&D spillovers decrease the demand for non-qualified labor and intermediate inputs, that physical capital and foreign R&D spillovers are complementary, and the interaction between capital formation and technological advances also applies to the international R&D spillovers effects