The Role of International Trade in Technological Change: The Case of U.S. Manufacturers

Abstract

Empirical data for U.S. manufacturing suggests either an insufficient reallocation of technology to those industries that export or a deterioration in the U.S. technological lead within many of its manufacturing industries. An interesting question is whether domestic policies, as opposed to international trade, are responsible for hurting U.S. competitiveness by suppressing technological advancement. I find that exports significantly promote reallocation of technology between industries and improvements in technology within industries; U.S. tax policies significantly reduce improvements in technology; and the real interest rate significantly promotes moveinents both between and within industries and is the single most important factor. (F2, L6)