Knowledge Diffusion, Trade, and Innovation across Countries and Sectors

This paper provides a unified framework for quantifying the cross-country and cross-sector interactions among trade, innovation, and knowledge diffusion. This framework is used to study the effect of trade liberalization in an endogenous growth model in which comparative advantage and the stock of knowledge are determined by innovation and diffusion. The model is calibrated to match observed cross-country and cross-sector heterogeneity in production, innovation efficiency, and knowledge spillovers. The counterfactual analysis shows that a reduction in trade costs induces a reallocation of R&D and comparative advantage across sectors. Heterogeneous knowledge diffusion amplifies the specialization effects of trade-induced R&D reallocation, becoming an important source of welfare. (JEL F12, F14, O33, O34, O41)

Effective Recruitment of Engineers From Other Companies: Whether to Pull Individuals or Teams?

This study empirically analyzes effective conditions for cross-border “learning by hiring” in the electronics industry. Many previous studies have indicated that the mobility of engineers serves as a conduit for knowledge diffusion and that knowledge is more likely transferred when the geographical distance is short, that is, when the conduit is short. However, the relationship between conduit thickness and density and the knowledge spillover effect has only rarely discussed. The findings of this study suggest that it is more effective to hire multiple people simultaneously for learning by hiring from companies in other countries.

The Origins of Technological Catch-up in China

Chapter 2 examines the growth of technological capabilities in the telecommunications industry in China, with a focus on Huawei and ZTE. These companies grew rapidly by localizing the production of fixed-line telephone switches, which were earlier imported or produced by foreign joint venture (JV) companies. While the market used to be completely dominated by foreign products in the 1980s, four locally owned companies caught up with the foreign companies in market shares and became absolute leaders by the end of the 1990s. The catch-up can be explained by three factors, namely, (1) the famous Chinese strategy of technology transfer called “trading market for technology,” (2) the knowledge diffusion from the first foreign JV, Shanghai Bell, to the local R&D consortium and then to other locally owned companies including Huawei, and (3) the government’s explicit promotion measures.