Global Diffusion of Technologies from China and the United States of America

Abstract

International trade helps facilitate the diffusion of technologies across boundaries. Through exports, a technology from an innovation country is transmitted to a consuming country which translates to economic growth. To improve exports, governments resort to trade protectionism, trade agreements, and currency devaluation. When a country employs a combination of the methods beyond moderation, it will lead to a trade war, as with the case of China and the United States of America. This study used the Bass Model to estimate the rate of technology diffusion and the saturation level between the two countries to get a picture of which country would ultimately dominate global trade. The results show that while the U.S. initially dominated international trade, China’s high imitation parameter and shorter time to saturation point will allow it to dominate in the long run.