The evolution of the world's technology frontier, 1973-2002

This period is long enough to cover both the productivity slowdown in the 1970s as well as the surge of innovations in the 1990s, which is useful for identifying the major factors. [...] In particular, Table 5 indicates that the size of the US industry’s R&D is by far the largest of all 17 countries: the median US industry’s size in terms of R&D is 39.6% of the sample. [...] For imports, we study their importance as diffusion mechanism from Canada, France, Germany, the UK, Japan, and the US (referred to as the G6 countries) However, when it comes to evaluating the joint impact of imports and FDI in technology diffusion, in the absence of FDI data at the industry level for all sample countries, we will study imports and FDI as diffusion mechanisms looking at the US as [...] Given the relative importance of the US in terms of R&D, with a median size of about 40%, and average size of 47% in the sample (see Table 5), this should give us a good first cut at this question of the relative importance of imports and FDI in technology diffusion. [...] As the correlation statistic of 0.988 at the bottom of the table indicates, countries that receive a lot of imports from the US also tend to receive a lot of FDI from the US.