Discussion of Knowledge Difgusion, Trade, and Innovation across - PowerPoint PPT Presentation

. . . . . . . . . . . . . . . 1/7 Discussion of “Knowledge Difgusion, Trade, and Innovation across Countries and Sectors” Discussion of “Knowledge Difgusion, Trade, and Innovation across Countries and Sectors” by Cai, Li, and Santacreu Christian Bayer U Bonn . . . . . . . . . . . . . . . . . . . . . . . . . June, 2019

. . . . . . . . . . . . . . . . . 2/7 Discussion of “Knowledge Difgusion, Trade, and Innovation across Countries and Sectors” This paper . . . . . . . . . . . . . . . . . . . . . . . ▶ Provides a unifjed framework ▶ of multi-sector, multi-country trade model ▶ with endogenous growth (R&D) and knowledge spillover

. . . . . . . . . . . . . . . . . 3/7 Discussion of “Knowledge Difgusion, Trade, and Innovation across Countries and Sectors” In particular Big picture question . . . . . . . . . . . . . . . . . . . . . . . ▶ Heterogeneity in knowldege production and spillovers ▶ across countries and across sectors ▶ What are the long-term welfare efgects of trade (liberalization)? ▶ How are the gains distributed?

. . . . . . . . . . . . . . . . . 4/7 Discussion of “Knowledge Difgusion, Trade, and Innovation across Countries and Sectors” My (limited) understanding of the mechanism under study knowledge stock is large, then . . . . . . . . . . . . . . . . . . . . . . . ▶ Trade increases market size and hence R&D incentives. ▶ Trade increases specialization. ▶ Knowledge spillovers erode individual gains but provide global gains. ▶ Suppose R&D is more productive in generating knowledge where ▶ more trade implies more R&D ▶ implies more growth but also greater specialization over time ▶ implies more trade.

. . . . . . . . . . . . . . . 5/7 Discussion of “Knowledge Difgusion, Trade, and Innovation across Countries and Sectors” What the paper achieves function with plenty of heterogeneity Key fjndings a static view suggests. EU countries gain most from trade liberalization, East Asian . . . . . . . . . . . . . . . . . . . . . . . . . countries (China missing) gain least. ▶ Develop a formal model that can capture these efgects ▶ Estimate trade costs and a reduced form knowledge production ▶ Then use these to calibrate model ▶ There are substantial dynamic costs of trade barriers ▶ Welfare gains of liberalization in the dynamic view much larger than ▶ The welfare gains are very heterogeneous across countries.

. . . . . . . . . . . . . . . . 6/7 Discussion of “Knowledge Difgusion, Trade, and Innovation across Countries and Sectors” A lot of praise novel but important implications . . . . . . . . . . . . . . . . . . . . . . . . understand debates of our time. ▶ The dynamic view for welfare gains of trade turns out to be not only ▶ Rich paper: Complex model, substantial data work, clear ▶ Key insight: Gains from trade are very heterogeneous helps to

. . . . . . . . . . . . . . . . . 7/7 Discussion of “Knowledge Difgusion, Trade, and Innovation across Countries and Sectors” Some comments The countries creating the most spillovers are relatively large . . . . . . . . . . . . . . . . . . . . . . . (Germany, Japan, UK, US) ▶ Data work seems to not control for country size. Might that matter?

tries, Luxembourg and the UK. In addition, the volume of Chi hubs in Europe, Germany, Italy and the UK, who exported textile tries to further produce exporting products increased rapidly sector value-added to their trading partners through fjnal goods trade. Germany and the UK connected indirectly through Turkey. India was also a sub-supply hub with infmow linkage from the UK and outfmow linkages to Nepal and Bangladesh. The presence of can be clearly identifjed in these networks. This is very different shown above. Figure 1.16 shows the textile sector related networks. which Italy’s presence in the textile sector is largely masked. . . . . . . . . been the American, European, Asian trade hubs for last decades. . . 7/7 Discussion of “Knowledge Difgusion, Trade, and Innovation across Countries and Sectors” Some comments . . . from World Bank (2018) . . . . . . . . . . . . . . . . . . . . . . . . . . . ▶ Data work seems to not control for country size. Might that matter? ▶ Importance of the GER, UK, JPN, USA in spillovers coincides with PRT NOR BEL DNK BEL BGR ESP SWE PRT MLT CHE NLD AUT ITA LUX GRC BRA POL ESP ITA NLD FRA IRL EST CAN AUT GBR LUX CYP IRL FIN FRA PAK MON SRI GRC MEX CHE PHI GBR POL LAO VIE SWE BRA NOR CAM HKG CZE DEU DEU BRN USA CZE DEU CHN USA KAZ DNK CHN HKG KAZ CAN HUN LTU HRV LVA J P N MON J P N PHI ROM KOR TAP BAN IND ROM LAO CYP KGZ RUS FIN BGR SIN MEX BTN RUS KOR BAN SVN VIE AUS TUR HUN KGZ THA SIN SVK TAP NPL LVA LTU AUS FIJ PAK SVK TUR MAL MLT THA SVN EST HRV IDN MAL IND IDN CAM FIJ BRN MDV NPL BTN 2000 2017 Note: the size of the circles represents the magnitude of value-added exports. The volume of value-added fmow between each pair of trading partners is repre - Meng (2018) based on the UIBE GVC indexes derived from the ADB 2018 ICIO table.

. . . . . . . . . . . . . . . . 7/7 Discussion of “Knowledge Difgusion, Trade, and Innovation across Countries and Sectors” Some comments been the American, European, Asian trade hubs for last decades. Doepke, de le Croix, and Mokyr (2018)) Potential of more trade decreasing R&D incentives, because of ideas . . . . . . . . . . . . . . . . . . . . . . . . leaking, decreasing specialization, decreasing trade... ▶ Data work seems to not control for country size. Might that matter? ▶ Importance of the GER, UK, JPN, USA in spillovers coincides with ▶ Could trade linkages directly infmuence knowledge spillovers? (think

. . . . . . . . . . . . . . . . 7/7 Discussion of “Knowledge Difgusion, Trade, and Innovation across Countries and Sectors” Some comments been the American, European, Asian trade hubs for last decades. Doepke, de le Croix, and Mokyr (2018)) . . . . . . . . . . . . . . . . . . . . . . . . coming from. Yet the paper is dense already. ▶ Data work seems to not control for country size. Might that matter? ▶ Importance of the GER, UK, JPN, USA in spillovers coincides with ▶ Could trade linkages directly infmuence knowledge spillovers? (think ▶ Would be nice to better understand where the heterogeneity is