Endogenous International ICT Spillovers in the APEC Region within the GTAP framework

This paper models international technology spillovers embodied in innovative electronic equipment traded across APEC economies. Spillovers are modelled as a function of the amount of electronic equipment traded as well as the absorption capacity of the recipient country. The Global Trade Analysis Project (GTAP) model is modified to link productivity variables of the different countries and to allow for a flow of recursive dynamic spillover effect. Bilateral electronic equipment trade data of GTAP are utilised and additional sets of commodities, countries and parameter files are introduced to highlight relationships among APEC economies. An index of technology absorption capacity is developed for each country on the basis of a number of Information and Communication Technology (ICT) and human capital measures. Numerical examples are provided from simulations for 21 regions including 19 APEC economies.