International spillovers and East Asian growth: the experience of Japan, Korea and Taiwan

Abstract

This study analyses the sources of economic growth for three East Asian economies – Japan, Korea and Taiwan – with special emphasis on international spillovers as an explanation of the differential patterns of growth. Three different proxy measures of international spillovers are constructed in the empirical analysis. Explicitly accounting for country-specific differences, both fixed effect and random effect regressions are applied to obtain coefficient estimates. It is found that technology spillovers going beyond geographic boundaries is a significant determinant of GDP growth for the three East Asian economies. Nevertheless, the direction of the spillover effect differs. For Japan and Korea, the empirical findings support the view that international spillovers contribute to GDP growth. International spillovers, however, are found to have dampened Taiwan's GDP growth during the period 1978 to 1992. These results suggest, for economies whose research effort is relatively low, a negative relationship between productivity and international spillovers might be revealed.