Discussion%20of%20Francisco%20Moris - PowerPoint PPT Presentation

Title: Discussion%20of%20Francisco%20Moris


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Discussion of Francisco Moris U.S.
International Trade in RD-Related Services and a
Transactions-Based Profile of Business RD

• Wolfgang Keller, University of Colorado and NBER

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Overview

• Shows recent trends in US trade in research,
  development, and testing (RDT) services
• Develops a new methodology, transactions-based
  RD accounting, for tracking international RD
  that emphasizes use of RD results
• Applies the new framework to 2003 US data from
  NSF and BEA

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Why is this important?

• Because the US trade surplus in RDT services is
  primarily due to exports by foreign-owned
  multinational affiliates ?
• New indicators on how new technology is used and
  diffused internationally for current levels of
  integration
• RD creates new technology, thereby raising
  productivity and that is the critical
  determinant of per-capita income

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Sources of Income Differences

• Production function Y AF(K,H,L)
• Two ways of raising output
• Higher effort and investment
• More hours worked ?L
• More investment ?K, ?H
• Higher efficiency
• More output for given L, K, and H ?A

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Output Differences the Breakdown

• Typical example U.S. output per worker in the
  year 1985 is 35 times as large as that of Niger

Output per Worker difference Output per Worker difference
Capital difference 1.5 x
Human capital difference 3.1 x
Productivity difference 7.7
Total Source Hall and Jones 1999 35
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But not much is known yet about the A factor

• Typically, what we know is
• Not based on data, but on constructed or
  otherwise estimated data
• Only correlations of observables with the
  constructed A factor
• Some indications that A is affected by
  technology activity both at home and abroad
• There is a great need to
• measure and quantify technology creation and
  linkages

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Three RD accounting perspectives

• Performance
• Funding
• Use

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Research, Development, and Testing Services
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US trade surplus in Business, Professional , and
Technical Services (BPT) and RDT Services
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But trade deficit in unaffiliated RDT since 2003
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US is net exporter of RDT largely through
affiliated trade
Millions of current US
Total Unaffiliated
Affiliated
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And that comes largely from foreign-owned
affiliates to their multinational parents
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US RDT trade surplus through exports by
foreign-owned affiliates does this matter?

• Quantitatively, how large are these net
  technology transfers from the US to other
  countries?
• Not that large 1.5 of US BERD in 2003
• Are there policy implications for the US?
• Technology sourcing, Listening-post FDI
• van Reenen et al., forthcoming American Economic
  Review
• International technology linkages go both ways.
  FDI coming into the US has a major positive
  effect on US firm productivity
• Keller and Yeaple (2005)

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Who is the ultimate beneficiary of US RD?

• Current RD expenditure statistics focus on two
  dimensions (Frascati Manual)
• RD Performer
• RD Funder
• System of National Accounts - based statistics
  would consider the RD user
• If market transactions on RD services are
  observed, we know their value, not only the costs
  of RD

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Relation to new US RD Satellite Accounts
Frascati Manual (FM) SNA
RD expenditures Exports of RDT Imports of RDT Output
RD expenditures Exports of RDT Imports of RDT Exports and imports of RD output
RD expenditures Exports of RDT Imports of RDT Capital formation
See Robbins (2006)
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The three faces of RD
RD
Funding
Use/Exchange
Production
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Table 4 A New Transactions View of RD
Transactions 2 to 5 are market-based
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RD in the closed economy
Gross Expend. RD used
Note 2 4, 3 5
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Trade in RD services in open economy

• RD service exports of one country are the RD
  service imports of another 2 3 4
  5 (assumes no intra-country RD trade)

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Application to 2003 US Business RD
1645
16 23
Units Billion current US
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Initial questions domestic RD trade

• In which industries is there a lot of RD service
  trade?
• What are the characteristics of firms that buy
  and sell RD services domestically?
• How large are RD purchases and sales, relative
  to own-account RD in the closed economy?

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International RD service trade

• What are the characteristics of firms that export
  or import RD services? With which other
  countries?
• Does RD service trade decline with distance,
  domestically as well as internationally, like
  most other trade does?

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Technology diffusion market-based and non-market
based
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US technology imports in 2001
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Why look at Multinationals FDI and the
Internalization Question

• Internalization The hierarchical structure
  between MNE parent and affiliate overcomes market
  failures internalize externalities--in the
  market for technological knowledge
• -gt that is a motive for FDI, versus technology
  sale or licensing

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Studying technology diffusion inside and outside
the MNE

• Comparing RDT service trade between
• affiliated and
• unaffiliated parties
• Are there systematic differences in these
  patterns?
• If so, does transfer pricing play a role?
• To the extent that it does not, what accounts for
  the systematic differences?

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Conclusion

• The paper provides the methodological basis for
  new research on technology linkages between
  countries
• Will improve understanding of international
  technology diffusion income differences
• Current efforts should also put emphasis on
  royalty and licensing payments
• And how can a more informed analysis of
  market-based linkages shed new light also on
  spillover relations?

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US affiliated trade in RDT, 2001-2003