1. Understanding North South technological flows From macro to micro
Giorgio Barba Navaretti
University of Milan and Centro Studi Luca d’Agliano
World Bank, Knowledge Economy Forum VII
Ancona June 17, 2008

2. Structure of presentation
First and second unbundling:
From polarization (from 1750 to 1950) to technology transfer
Channels of North South transfer:
Trade
Fdi
Increasing emphasis on the role of the firm
=> Beyond representative agent
Third unbundling
Fragmentation of production
Geography of technology flows changes

3. First unbundling: markets from production

4. Second unbundling:ideas from production and markets

5. Channels for technology transfer
Trade
Coe-Helpman (1995) onwards
Knowledge content of trade
FDI: analysis of spillovers
Blomstrom et al in the 80s on developing countries
BUT MOSTLY IN THE AGGREGATE

6. How to measure quality of trade: e.g. Knowledge content of machines
From Barba Navaretti, Schiff and Soloaga, 2006

7. Persistency of the technology gap, 7 years lag
From Barba Navaretti, Schiff and Soloaga, 2006

8. The firm Trade: FDI Beyond the representative agent
Studies by James Tybout and others
Self selection vs. learning by exporting?
What characteristics of the firm strengthen the link between export and productivity?
FDI
What’s the channel: vertical or horizontal linkages?

9. Be more specific about exports!
Productivity growth declines with exports up to an average 38-48% share, then it rises
From Barba Navaretti, Tucci and Galeotti, 2002

10. Backward linkages matter

11. Third unbundling: tasks within the firm
Spitz, 2004, reproduced from Baldwin, ‘Globalisation, the great unbundling(s)’, 2006

12. Leads to production fragmentation
Source: Oecd, “Offshoring and Employment: Trends and Impact”, 2007

13. Joint effect of export and imports matters
From Tucci, 2005

14. Are technological flows still unidirectional?
Acquisition of Jaguar and Land Rover by Tata Motors
Chairman Tata: his company will not transfer Jaguar and Land Rover production and component sourcing to developing countries

15. China: using more domestic inputs in exports
From Cui and Syed (2007)

16. China: and upgrading export sophistication
From Cui and Syed (2007)

17. Conclusions
Technology transfer strongly affectd by how North/South firms interact
Unbundling of production has created extraordinary new opportunities for technology diffusion
Technological flows no longer unilateral
Many countries or part of countries still excluded

18. References:
Baldwin R., 2006, Globalisation, the great unbundling(s), a report prepared for the Finnish Prime Minister’s Office;
Baldwin R. and P. Martin, 1999, Two Waves of Globalisation: Superficial Similarities, Fundamental Differences, NBER Working Paper No. 6904;
Barba Navaretti G., M. Schiff and I. Soloaga, 2006, Weightless Machines and Costless Knowledge: an Empirical Analysis of Trade and Technology Diffusion, in Microfoundations of International Technology Diffusion, edited by B. Hoekman and B. Smarzynska, Washington: World Bank and Plagrave Macmillan;
Barba Navaretti G., M. Galeotti and A. Tucci, 2002, Do Not Get Trapped into Crossing: Indian Firms and Foreign Markets, Centro Studi Luca d'Agliano Development Studies Working Paper No. 170;

19. Coe D. and E. Helpman, 1995, International R&D Spillovers, NBER Working Paper No. W4444;
Cui L. and M. Syed, 2007, The Shifting Structure of China’s Trade and Production, IMF Working Paper No. 214;
Oecd, 2007, Offshoring and Employment: Trends and Impact;
Smarzynska Javorcik B., 2004, Does Foreign Direct Investment Increase the Productivity of Domestic Firms? In Search of Spillovers through Backward Linkages, American Economic Review 94 (3);
Tucci A., 2005, Trade, Foreign Networks and Performance: a Firm-Level Analysis for India, Centro Studi Luca d'Agliano Development Studies Working Paper No. 199;
UNCTAD, 2007, World Investment Report.