How Do Productivity Benefits Spill Over Across Firms? Explorations in a Heterogeneous Firm Applied General Equilibrium Trade Model (2024)

Politická ekonomie 2023, 71(2):104-129|DOI:10.18267/j.polek.1382

How Do Productivity Benefits Spill Over Across Firms? Explorations in a Heterogeneous Firm Applied General Equilibrium Trade Model

Gouranga G. Das How Do Productivity Benefits Spill Over Across Firms? Explorations in a Heterogeneous Firm Applied General Equilibrium Trade Model (1)ORCID...a, Zeynep Akgul How Do Productivity Benefits Spill Over Across Firms? Explorations in a Heterogeneous Firm Applied General Equilibrium Trade Model (2)ORCID...b, Badri G. Narayanan How Do Productivity Benefits Spill Over Across Firms? Explorations in a Heterogeneous Firm Applied General Equilibrium Trade Model (3)ORCID...c
aDepartment of Economics, Hanyang, University Erica Campus, Ansan, South Korea
bCenter for Global Trade Analysis, Purdue University, USA
cSchool of Environment and Forestry Sciences, University of Washington, Seattle, USA

Considerable diffusion of technology occurs via global trade and foreign direct investment (FDI) while firm heterogeneities cause considerable production heterogeneities. Hi-tech products and investment goods of differentiated varieties from emerging and developed economies are vehicles of superior technology. Given this stylized evidence, we analyse factors facilitating (or inhibiting) technological spillover to domestic firms in the host nations in a counterfactual scenario of a Trans-Pacific-Partnership (TPP) deal. By using a mixture interface of global computable general equi-librium (CGE) models of FDI (GTAP-FDI) and firm heterogeneity model of Global Trade Analysis Project, GTAP Heterogeneous (GTAP-HET), we calibrate impacts of trade and FDI spillovers on: (i) global production, (ii) trade patterns, (iii) welfare and (iv) regional productivity gains. Importance of regional trade agreements and policy for productivity spillovers is highlighted.

Keywords: GTAP, CGE, firm heterogeneity, FDI, productivity spillover, TPP
JEL classification: F11, F21, O24, O33

Received: February 11, 2022; Revised: October 16, 2022; Accepted: January 9, 2023; Published: April 25, 2023 Show citation

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Das, G.G., Akgul, Z., & Narayanan, B.G. (2023). How Do Productivity Benefits Spill Over Across Firms? Explorations in a Heterogeneous Firm Applied General Equilibrium Trade Model. Politická ekonomie,71(2),104-129. doi:10.18267/j.polek.1382

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