Barriers to International Mobility and Technology Diffusion

Abstract

Recent research shows that the process of international technology diffusion is slow, but why is this process slow? This paper argues that this process is slow due to barriers to international mobility. This paper builds a theoretical model of learning by exposure and shows that technologies diffuse across borders as societies are exposed to foreign technologies and ideas. Featuring productivity gap as a dependent variable and bilateral visa restrictions data of 30 host OECD countries and 198 home countries during 2001-2012, the empirical evidence suggests that the international technology gap is persistent over time and increases with barriers to mobility. The effect of barriers to mobility on the technology gap depends on the severity of the barriers. On average, the annual technology gap between the host and the home countries can be bridged by about 0.84 to 1.32 percent by removing barriers to international mobility. Important policy implications include visa facilitation programs and soft visa policies to promote cultural and scientific exchange and to promote technology diffusion across countries.