Essays on the Transmission and Diffusion of Productive Knowledge in International Economics

Numerous empirical studies have shown the difficulties associated with the transmission of knowledge and the limitations of its diffusion process. What are the implications of these difficulties and limitations to international economics? This dissertation deals with this question by looking at how productive knowledge plays a role in the evolution of the comparative advantage of nations and the international expansion of multinational corporations. The first chapter finds that a country is 65% more likely to start exporting a good that is being exported by any of its geographic neighbors, consistently with evidence on the limited geographic patterns of knowledge diffusion. The second chapter finds that migrants, serving as carriers of productive knowledge, play a role in explaining the appearances of new export industries in both their sending and receiving countries. In particular, in terms of their ability to induce exports in the average country, an increase of only 65,000 people in the stock of migrants is associated with about 15% increase in the likelihood of adding a new product to a country's export basket. The figure becomes 15,000 for skilled migrants. The third chapter looks at how the barriers to knowledge transmission within the firm limit the horizontal expansion of multinational corporations. The findings suggest that multinational corporations are, on average, about 12% less likely to horizontally expand a sector that is one standard deviation above the mean in the knowledge intensity scale.