Trade and diffusion of embodied technology: an empirical analysis

Using global patents, citations, inter-sectoral sales, and trade data, we examine the interna-tional diffusion of technology through imported inputs. We use citations and sales data to characterize knowledge and production input-output tables for individual countries. Using these tables, we construct a measure of the flow of knowledge-weighted and production-weighted technology embodied in inputs imported from the US. We develop an instru-mental variable strategy to establish that increases in embodied technology imports lead to increased innovation and knowledge diffusion in sectors within importing countries. Ef-fects are substantially larger for knowledge-weighted imports of embodied technology.& COPY; 2023 Elsevier B.V. All rights reserved.