International Technology Trade and Innovation Efficiency:A Cross-Country Study

Show-Ling JangChe-Jung Hsu

Tzu-Ti LinDepartment of Economics, National Taiwan University

Dar-Zen Chen Department of Economics, National Taiwan University

Mu-Hsuan Huang Department of Economics, National Taiwan University

Annual Paris Conference on “Money, Economy and Management”

July 2011

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1. Introduction

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Innovation

TechnologyImprovemen

t

TFPShock

EconomicGrowth

Crucial For Every Nation!

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Conventional Policy Making

Technological Improvement Depends On

R&D Expenditure

Researchers

Technicians

Reference: Wang and Huang (2007); Sharma and Thomas (2008)

This neglects EXTERNAL sourcing!

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Measurement of External Sourcing:Technology Balance of Payment (TBP)

TBP payments capture the firm’s activities of importing the disembodied technology, while TBP receipts enable us to measure the exportation of disembodied technology through export

Reference: TBP Manual (1990); Hollanders (2008)

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Reasonably Using TBP Data

However, TBP data has its limitations, and sometimes can be misused.Ex: Some policy makers tend to merely consider surplus or deficit of technological trade when proposing new policies

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Our Research Purpose•Prop

osing a reasonably framework for policy makers to utilizing TBP data

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•Conducting an innovation efficiency measurement encompassing both internal and external indicators

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2. Technology Balance of Payment

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Table1 TBP in 32 Countries

Note: * Original data are missing and have been filled in by linear interpolation of the closest years’ observations .Source: OECD(2010)

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TBP Analyses

Conventional

SurplusOr

Deficit

TotalQuantit

y

Suggested

Input

Share

TBPFlow

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Table2 Ratio of TBP Receipts to Payments

Source: OECD(2010)

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Table 3aTop 5 Import Sources of Selected Countries

Source: International Economic Accounts; BEA; Indicators of S&T in Japan; MEXT.

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Table 3bTop 5 Export Destinations of Selected Countries

Source: International Economic Accounts; BEA; Indicators of S&T in Japan; MEXT.

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3. Innovation Efficiency

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Data Envelopment Analysis (DEA)

DEA is a widely acknowledged linear programming model for calculating efficiency, even in cross-country studies.Ex: Rousseau and Rousseau (1997)Wang and Huang (2007)Sharma and Thomas (2008)

Reference: Charnes et al.(1994); Farrel(1957); Banker et al.(1984)

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Chosen Variables

•R&D Expenditure

•TBP Payments

Input

•Patent Counts

•H-index for Patents

•Research Publications

•TBP Receipts

Output

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Table 6Descriptive Statistics of Variables in DEA

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Empirical Results

•Canada, the US, Singapore, and Taiwan are seen as nations which most efficiently allocate their research resources in terms of innovation.

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•After taking technological trade into consideration, we have more accurate results.

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Table 7Innovation Efficiency Scores in DEA

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4. Conclusion

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Concluding Remarks

•TBP is a both practical and convenient indicator, on condition that we analyze and interpret it properly

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•Both internal and external indicators should be taken into consideration when analyzing national innovation efficiency

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THANK YOU!