International Technology Diffusion WOLFGANG

752 1 University of Texas, Austin; NBER and CEPR. I have benefited from discussions related to this paper with Bob Baldwin, Elhanan Helpman, Danny Quah, Andres Rodriguez-Claré, Dani Rodrik, Jim Tybout, and Stephen Yeaple. Oded Galor, Peter Howitt, Sam Kortum, Pete Klenow, Pierre Mohnen, Jim Rauch, Carol Shiue, Dan Trefler, and seminar participants at Industry Canada, three anonymous referees and John McMillan provided helpful comments. Support by NSF grant SES 9818902 is gratefully acknowledged. 2 In addition, institutions and policy have been emphasized as well; see, e.g., Daron Acemoglu, Simon Johnson, and James Robinson (2001); Abhijit Banerjee and Lakshmi Iyer (2003); and Carol Shiue and Wolfgang Keller (2004). 3 The G-7 countries (the largest seven industrialized countries) accounted for about 84 percent of the world’s research and development (R&D) spending in 1995, for example; their share in world GDP was only 64 percent. The world’s distribution of production is much less skewed.